FEBRUARY 27, 2004; 2:00 p.m. NOT TO BE PUBLISHED
Commonwealth Of Kentucky Court of Appeals
LOIS C. TASH AND TASHREALTORS.COM, INC.
APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE F. KENNETH CONLIFFE, JUDGE ACTION NO. 01-CI-002206
JOHN W. O'NEIL
OPINION REVERSING AND REMANDING ** ** ** ** ** BEFORE: KNOPF, TACKETT, AND VANMETER, JUDGES. Appellants, Lois C. Tash (Tash) and
TashRealtors.com, Inc., solely owned by Tash, appeal from a November 4, 2002 judgment of the Jefferson Circuit Court that awarded Tash a brokerage commission of $5,000.00 for work she performed for John W. O'Neil (O'Neil) in connection with O'Neil’s purchase of a restaurant for $1.3 million. In Tash’s
complaint, she sought $39,000.00 plus prejudgment interest. After the trial court failed to award the amount she requested
and denied prejudgment interest, Tash appealed to this Court. Finding the trial court erred we reverse and remand. In July of 2000, appellee, O'Neil, hired Tash to find commercial real estate for him to purchase. On June 21, 2000,
Tash obtained a listing for a restaurant and its out lots located at 15206 Shelbyville Road, Jefferson County, Kentucky. Donna and Gerald Brenzel (the Brenzels) owned and operated this restaurant through a corporation known as Shagbark Hill, Inc. (Shagbark). At the time Tash initially contacted the Brenzels, neither she nor O'Neil knew that Shagbark was involved in Chapter 11 bankruptcy. Sometime after July 4, 2000, Tash and Despite this knowledge, on July
O'Neil discovered this fact.
18, 2000, O'Neil submitted through Tash an offer to purchase the restaurant and its adjacent out lots for $1.35 million dollars. Tash prepared the offer and O'Neil signed it. According to the
July 18th offer, if the sale were consummated, Tash would receive a commission of 3% of the value of the out lots, which were valued at $475,000.00. The Brenzels rejected this first offer.
On July 23, 2000, O'Neil submitted another offer through Tash to purchase the restaurant for $1.45 million dollars. Tash prepared the offer and O'Neil signed it. Once more,
The July 23rd
offer contained the same commission provision as the prior offer. The Brenzels rejected this offer as well. According to
O'Neil, Tash prepared at least one more offer for him that the Brenzels rejected. Eventually O'Neil hired an attorney to facilitate the purchase since any transaction involving the restaurant required the bankruptcy court’s approval. According to the record,
O'Neil felt at this point that his agency relationship with Tash was finished since she lacked the legal skill to help him procure the restaurant. However, according to the record,
O'Neil never informed Tash that her services were no longer required. On August 31, 2000, O'Neil and the Brenzels executed
an agreement for O'Neil to purchase the restaurant and its out lots for $1.3 million. transaction. Prior to the closing, Shagbark’s real estate agent, Bill Andriot (Andriot), moved the bankruptcy court for a commission on the sale and received approximately $5,600.00. Eventually, Tash demanded a commission from O'Neil as well. O'Neil refused and Tash filed suit against him. In her The bankruptcy court approved the
complaint, Tash asked for a commission of $39,000.00, which represented 3% of the purchase price of $1.3 million. asked for prejudgment interest as well. proceeded to a bench trial. She also
Tash and O'Neil
The Jefferson Circuit Court found
in Tash’s favor but only awarded her a commission of $5,000.00 without prejudgment interest. Tash now appeals to this Court.
Tash argues that the Jefferson Circuit Court erred by only awarding her $5,000.00 as a commission for property that was purchased for $1.3 million. Citing Shanklin v. Townsend,
Ky., 431 S.W.2d 874 (1968), Tash insists that since O'Neil purchased the restaurant outside of the agency agreement between them, the Jefferson Circuit Court was required to base her commission on the entire purchase price of the transaction. Furthermore, since both the July 18th offer and the July 23rd offer contained provisions that stated her commission would be 3% of the value of the out lots, she argues that the trial court should have awarded her 3% of the full purchase price of $1.3 million or $39,000.00. In the alternative, Tash argues that the Jefferson Circuit Court erred when it adopted as her commission the amount that Andriot actually received, which, according to Tash, was $5,600.00. Tash contends that the trial court should have
adopted as her commission the amount the bankruptcy court initially awarded to Andriot. $14,250.00. Tash argues that the Jefferson Circuit Court acted arbitrarily when it reduced her award from $5,600.00 to $5,000.00. She contends that the trial court’s action had no That amount was originally
basis in either law or fact.
Lastly, Tash argues that she was entitled to prejudgment interest as a matter of law since she sought recovery of a liquidated amount. Middleton v. Middleton, Ky.,
152 S.W.2d 266 (1941); City of Henderson Police & Fireman Pension Board v. Riley, Ky. App., 674 S.W.2d 27 (1984); Shanklin v. Townsend, Ky., 434 S.W.2d 655 (1968); KRS 360.010. Citing
Shanklin, Tash argues that her claim was not for damages but for compensation owed under a contract. Regarding the appropriate standard of review, this Court stated in Bealert v. Mitchell, Ky. App., 585 S.W.2d 417, 418 (1979): [I]n any case that is tried without the intervention of a jury, the findings of fact of the trial court should not be reversed unless they are determined to be clearly erroneous. In making such consideration the appellate court must keep in mind that the trial court had the opportunity to hear the evidence and observe the witnesses, so as to judge their credibility, and therefore, is in the best position to make findings of fact. 7 W. Clay, Kentucky Practice, CR 52.01. In its June 26, 2002 memorandum and order that denied summary judgment, the Jefferson Circuit Court determined that prior to the execution of the August 31, 2000 agreement, O'Neil was not obligated to pay Tash any commission. The August 31,
2000 agreement contained the following provision: Seller and Purchaser each represents and warrants to the other that this transaction
has resulted between the parties without any assistance of any broker or finder being involved other than Paul Semonin Realtors and TashRealtors.com, Inc. (the “Brokers”). Seller is responsible for any fees and commissions to Paul Semonin Realtors and Purchaser is responsible for any fees and commissions due to TashRealtors.com, Inc. ... The Jefferson Circuit Court determined that this provision obligated O'Neil to pay a commission to Tash. However, it
concluded that the provision was ambiguous regarding the amount since the agreement never addressed amount; thus, the trial court denied summary judgment. In reaching its decision, the Jefferson Circuit Court found it necessary to rely upon parole evidence to determine the amount of Tash’s commission. The trial court relied upon the
testimony of Andriot, Shagbark’s real estate agent, who testified that, initially, he was to receive a commission of 6% of the purchase price and this was to have been split between himself and the purchaser’s agent. The bankruptcy court However, Andriot
initially awarded Andriot $14,250.00.
testified that he only received approximately $5,600.00. Further, he testified that he paid the initial cost of listing the restaurant. The trial court concluded that Tash should Furthermore, since Andriot paid
receive no more than Andriot.
the initial listing cost, the trial court deducted that amount from Tash’s award, reducing it to $5,000.00. However, when the
trial court based Tash’s commission on what the bankruptcy court awarded to Andriot, it was essentially comparing “apples to oranges.” In the case sub judice, the trial court tried to
fairly and equitably determine the amount of Tash’s commission, and it based its decision on the bankruptcy court’s award to Andriot. However, the bankruptcy court was not constrained by By operation of statute,
the same standards as the trial court.
a bankruptcy court has incredibly broad discretion in determining the payment of professionals employed by the bankruptcy trustee, such as Andriot. In re Omegas Group, Inc., 195 B.R.875, 879-880 (Bkrtcy W.D. Ky., 1996), see also 11 U.S.C. § 328. Thus, the value of Andriot’s commission did not While well
necessarily reflect the value of Tash’s commission.
intentioned, the trial court erred since its determination was manifestly against the weight of the evidence. Despite this, we must reject Tash’s argument that she deserves 3% of the entire purchase price. Tash relies on
Shanklin v. Townsend, Ky., 431 S.W.2d 874 (1968) for the proposition that if a real estate transaction is consummated outside of an existing agency agreement, a trial court is required to set a commission for the aggrieved agent based on the full sales price. A review of Shanklin, however, shows that In Shanklin, sellers and broker
Tash’s reliance is misplaced.
executed a brokerage agreement that contained a provision that
held sellers responsible for paying broker a commission regardless of who effectuated the sale. Id. at 875. The
Shanklin Court merely enforced the sellers’ contractual obligation. Since we have held that the trial court erred when it based the amount of Tash’s commission on the amount Andriot received from the bankruptcy court, we need not address Tash’s other arguments. Tash insists she is entitled to prejudgment interest because the amount she sought was liquidated. Tash correctly
stated that when damages are liquidated, prejudgment interest is awarded as a matter of course. Nucor Corp. v. General Elect. The Kentucky Supreme
Co., Ky., 812 S.W.2d 136, 141 (1991).
Court, quoting Black’s Law Dictionary 930 (6th ed. 1990), defined “liquidated” as an amount “[m]ade certain or fixed by agreement of parties or by operation of law.” Id. In contrast, the
Supreme Court, once again quoting Black’s Law Dictionary, supra at 1537, defined “unliquidated” as “[d]amages which have not been determined or calculated, . . . not yet reduced to a certainty in respect to amount.” Id. As the trial court
pointed out in its memorandum and order, O'Neil was not obligated to pay Tash any commission prior to the execution of the August 31, 2000 agreement. And, as the trial court noted,
this agreement was ambiguous since it failed to set an amount.
Inevitably, we must conclude that the amount of Tash’s commission was unknown, thus unliquidated, until determined by the trial court. Since the amount was unliquidated, Tash was
not entitled to prejudgment interest as a matter of law. According to the Kentucky Supreme Court: A real estate broker may earn his commission ‘either by producing a person who is not only then, but at all times, ready, able, and willing to purchase the property on the prescribed terms, or by obtaining from the customer a binding contract which the landowner himself may enforce, in case of a breach or default. (Citations omitted.) Shanklin v.Townsend, Ky., 431 S.W.2d 874, 876 (1968). While the broker in Shanklin worked for the seller, we find the holding in Shanklin also applies to a purchaser’s broker. In
the case sub judice, Tash never obtained a contract that O'Neil could enforce, although she drafted and O'Neil signed at least two purchase agreements. Moreover, Tash never produced a seller
who was able to sell the property unconditionally to O'Neil. However, contrary to the trial court’s conclusion, the August 31, 2000 sales contract did not create any new obligations between O’Neil and Tash. It merely recognized any contractual Pursuant to
rights already existing under the agency agreement.
the agency agreement, Tash did produce sellers, the Brenzels, who were, but for the bankruptcy complications, ready and willing to sell their property to O'Neil and O'Neil eventually
purchased the Brenzels’ property.
So while Tash was not
entitled to a full commission, she rendered a valuable service to O'Neil under the agency agreement. Therefore, for the foregoing reasons, we reverse the trial court’s judgment and remand for the trial court to make additional findings of fact regarding the amount of the commission owed by O'Neil to Tash based on the work Tash performed for O'Neil and the customary rate for brokers in the community. KNOPF, JUDGE, CONCURS. VANMETER, JUDGE, CONCURS IN RESULT ONLY AND FILES SEPARATE OPINION. VANMETER, JUDGE: I concur in the result reached by
the majority, but I write separately to express my view that the record clearly reflects the parties’ intent that Tash would receive a commission of three percent (3%) of the value of the out lots sold as a part of the transaction. The prior offers
tendered by O’Neil to the sellers contemplated that Tash would receive that commission. Further in the final expression of the
agreement between O’Neil and the sellers, O’Neil agreed to be responsible for Tash’s commission. On remand, I would direct
the Jefferson Circuit Court to enter judgment in favor of Tash for, $14,250.00, i.e., three percent (3%) of the $475,000, value of the out lots.
BRIEF FOR APPELLANT: I. Joel Frockt Maze Berman & Frockt, PLLC Louisville, Kentucky
BRIEF FOR APPELLEE: David M. Cantor Seiller & Handmaker, LLP Louisville, Kentucky