Trammell Crow Co. No. 60 v. Harkinson
| Decision Date | 06 June 1997 |
| Docket Number | No. 95-1255,95-1255 |
| Citation | 944 S.W.2d 631 |
| Parties | 40 Tex. Sup. Ct. J. 425 TRAMMEL CROW COMPANY NO. 60, et al., Petitioners, v. William Jefferson HARKINSON and Jeff Harkinson Investments, Inc., Respondents. |
| Court | Texas Supreme Court |
Kim M. Meaders, Douglas C. Kittleson, Edward P. Perrin, Jr., Dallas, for petitioners.
William Pannill, Roy L. Barnes, Houston, for respondents.
The issue in this case is whether a real estate broker's claims for tortious interference with contract and prospective business relations and civil conspiracy to tortiously interfere are barred under the Texas Real Estate License Act absent a signed written commission agreement. The court of appeals held these claims were not barred. 915 S.W.2d 28. Because we conclude that the broker's claims for tortious interference and civil conspiracy are in essence claims to recover a commission in violation of section 20(b) of the Real Estate License Act, TEX.REV.CIV. STAT. ANN. art. 6573a (Vernon Supp.1997), we reverse that part of the judgment of the court of appeals and render judgment that the broker take nothing on these claims.
Patterson/McLaine Group, Inc., authorized William Jefferson Harkinson, a licensed real estate broker, to act as its exclusive representative in locating rental space for Hunt Products Company, Inc. The exclusive representation agreement between Patterson/McLaine and Harkinson expressly provided that Harkinson "will look solely to the landlord/owner for his fee...." Harkinson found suitable space on LaReunion Parkway in Dallas. The property was owned by Trammell Crow No. 60 (Crow 60) and Petula Associates, Ltd., a joint venture. Trammell Crow Dallas Industrial (Crow Industrial) managed the property.
Upon finding the property, Harkinson began negotiating his commission and a lease with Richard Strader of Crow Industrial. Strader told Harkinson that the owners of the property would pay a 4 1/2 percent cash commission to an outside broker who brought in a tenant for the space. Strader sent Harkinson an unsigned commission agreement providing for a 4 1/2 percent up-front cash commission or a commission of 6 percent of each month's rental over the life of the lease. Harkinson redrafted the commission agreement making various changes in its terms, including providing for only a 4 1/2 percent up-front cash commission. He signed the revised agreement and returned it to Strader to be signed by the owners. Neither the owners nor their agent ever signed any commission agreement with Harkinson.
Harkinson negotiated a lease for over $7,000,000. Seeking to reduce its rental obligation, Dan Patterson of Patterson/McLaine, without Harkinson's knowledge, agreed with the owners that they would pay Harkinson a commission of $30,000, considerably less than the $346,500 Harkinson would have received if he were paid a 4 1/2 percent commission. Harkinson refused the $30,000 commission and sued Crow 60, Petula, Crow Industrial, Strader and his immediate supervisor, Thomas Lieser, Petula's parent corporation, Principal Mutual Life Insurance Company and its agent, Douglas D. Achtemeier (collectively, the Crow defendants), and Patterson/McLaine, Dan Patterson, and Hunt Products Company, Inc. (collectively, the Hunt defendants) for the loss of his commission. Harkinson alleged fraud, breach of contract, breach of the duty of good faith and fair dealing, tortious interference with contract and prospective business relations, and civil conspiracy.
All defendants moved for summary judgment, asserting that, absent a written commission agreement, Harkinson's claims were barred by section 20(b) of the Texas Real Estate License Act (RELA). TEX.REV.CIV. STAT. ANN. art. 6573a, § 20(b). The trial court granted summary judgment for the defendants on all claims. The court of appeals reversed the summary judgment on Harkinson's tortious interference and civil conspiracy claims, concluding that although Harkinson lacked an enforceable commission agreement, that uneforceability was not a defense to tortious interference. 915 S.W.2d at 33. For the reasons stated below, we conclude that Harkinson's tortious interference and civil conspiracy claims are precluded under section 20(b) of RELA.
Section 20(b) of RELA specifically provides:
An action may not be brought in a court in this state for the recovery of a commission for the sale or purchase of real estate unless the promise or agreement on which the action is brought, or some memorandum thereof, is in writing and signed by the party to be charged or signed by a person lawfully authorized by him to sign it.
TEX.REV.CIV. STAT. ANN. art. 6573a, § 20(b).
Harkinson does not have a signed written commission agreement from anyone. He has two agreements, neither of which comport with section 20(b). He has a written exclusive representation agreement with the Hunt defendants. That agreement, though signed and in writing, simply is not a commission agreement. To the contrary, the exclusive representation agreement provides only that Harkinson must negotiate whatever commission he is to receive, if any, with the prospective lessor. Harkinson also has an oral promise from the owners to pay him a 4 1/2 percent up-front commission. This agreement, though a commission agreement, is neither written nor signed by the party to be charged, the owners. Section 20(b) precludes enforcement of either of these contracts to recover a commission.
Given that his contract actions are barred by section 20(b), Harkinson asserts that section 20(b) does not preclude his tortious interference claims for two reasons. First, he asserts that his claims are not for the recovery of a commission, but for tort damages resulting from the tortious interference with his oral commission agreement and the exclusive representation agreement. Second, section 20(b) does not bar his claims, Harkinson contends, because of our decision in Clements v. Withers, 437 S.W.2d 818 (Tex.1969). In Clements, we stated that although a written commission agreement was unenforceable under section 20(b), its uneforceability did not give third parties the right to interfere with the performance of oral contracts. 437 S.W.2d at 821. We find neither proposition persuasive.
Harkinson's claims, though couched in terms of a tort, are for the recovery of a real estate commission. Cf. Southwestern Bell Telephone Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex.1991)(considering contract and tort liabilities arising from the same conduct and injury). For each cause of action stated in his petition, Harkinson alleges that the defendants' conduct damaged him in the amount of at least $346,500, the amount of his commission had the owners paid a 4 1/2 percent up-front cash commission. Harkinson's pleadings belie his arguments in this Court that his claims are not for the recovery of his commission.
Beyond the damages allegations, an examination of Harkinson's tortious interference claims reveals the fallacy of his contention that he is seeking anything other than his lost commission.
Harkinson alleges that the Hunt defendants interfered with his oral commission agreement by knowingly and intentionally inducing Crow 60 and Petula to breach the oral commission agreement. Alternatively, Harkinson alleges that the Hunt defendants tortiously interfered with Harkinson's prospective business relation with Crow 60 and Petula by inducing the owners not to execute Harkinson's commission agreement. The allegation here is that but for the Hunt defendants' conduct, Harkinson would have been paid his 4 1/2 percent commission. These claims unquestionably seek recovery of a real estate commission.
Harkinson's claim for tortious interference with his exclusive representation agreement raises a more difficult question. Nevertheless, we conclude that this claim is nothing more than an indirect attempt to recover on his oral commission agreement.
Harkinson alleges that the Crow defendants interfered with his opportunity to be the exclusive representative to negotiate lease terms on behalf of Hunt Products. He alleges that the Crow defendants induced Patterson/McLaine to negotiate behind his back a lease that reduced the amount of his commission. The exclusive representation agreement, however, does not require the Hunt defendants, or any party, to pay Harkinson a commission. Accordingly, the Crow defendants' actions did not as a matter of law interfere with any contractual right to a commission.
As we read Harkinson's claim, he asserts that had the Crow defendants not interfered with his exclusive representation agreement, he would have been paid his commission as the exclusive representative negotiating a lease for Hunt Products. Harkinson cannot make out a claim for tortious interference by bootstrapping his unenforceable oral commission agreement onto his exclusive representation agreement. He cannot do indirectly what the law says he cannot do directly.
The most that can be said of Harkinson's claim for tortious interference with the exclusive representation agreement is that the Crow defendants deprived Harkinson of the opportunity to act as the exclusive representative for negotiating lease terms on behalf of Hunt Products. But even this claim is illusory and wholly derivative of his unenforceable oral commission agreement. The loss of the opportunity to negotiate exclusively on behalf of Hunt Products in this instance translates only into the loss of the expectancy of receiving a commission at the end of the lease negotiations. The Legislature, in section 20(b), has nullified any such expectancy unless the broker has a signed written commission agreement. We hold that Harkinson's claim for tortious interference with his...
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