Jonathan R. Dostal d/b/a JD Realty, Respondent, vs. FORE-M, LLC, Appellant.
Annotate this CaseThis opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480 A. 08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
A05-1609
Jonathan R. Dostal d/b/a JD Realty,
Respondent,
vs.
FORE-M, LLC,
Appellant.
Filed May 16, 2006
Affirmed
Lansing, Judge
Chisago County District Court
File No. 13-C0-04-000792
Stanford P. Hill, Bassford Remele, A Professional Association, 33 South Sixth Street, Suite 3800, Minneapolis, MN 55402-3707 (for respondent)
Thomas G. Wallrich, Steven H. Silton, Cyrenthia D. Jordan, Mansfield, Tannick & Cohen, P.A., 1700 U.S. Bank Plaza South, 220 South Sixth Street, Minneapolis, MN 55402-4511 (for appellant)
Considered and decided by Lansing, Presiding Judge; Toussaint, Chief Judge; and Randall, Judge.
U N P U B L I S H E D O P I N I O N
LANSING, Judge
In this dispute over a broker's commission under an exclusive-right-to-sell agreement, the owner appeals from the district court's judgment that the broker is entitled to the contractual commission on a sale for which the purchase agreement was fully executed within the effective term of the exclusive brokerage agreement. Because the district court did not err in its application of the law to the essentially undisputed facts, we affirm.
F A C T S
On May 10, 2002, FORE-M, LLC, entered into a brokerage agreement with Jonathan Dostal, d/b/a JD Realty, to market a tract of its residential property in Rush City, Minnesota. The written agreement states that "the parties wish to enter into an agreement whereby Broker will have the exclusive right to sell the Property" and that the "Broker shall have the exclusive right to sell the Property for a period of one (1) year." The method for payment of commissions requires that the "Owner shall pay to Broker at the successful Closing of each lot contained within the Property a real estate commission of Four (4%) Percent of the lot sale price agreed to by Owner."
Under the agreement, either party may terminate for listed reasons, including a determination by either party "in its sole discretion that it no longer desires to work with the other party hereto." To terminate, the party must provide written notice and the termination is effective five days after delivery of the notice for any reason other than the sole-discretion termination, which is effective thirty days after delivery of the notice. Following termination, FORE-M "shall remain obligated to pay Broker the Commission as set forth in this Agreement on lots within the Property for which purchase agreements have been fully executed by Owner, Broker and purchaser, and which are successfully closed."
On April 8, 2003, FORE-M entered into a purchase agreement with Edina Development Corporation for the sale of the entire property. The sale was negotiated by another broker under a separate agreement with FORE-M. Dostal was not aware of FORE-M's purchase agreement with Edina Development, but in his marketing efforts he had dealt with a broker representing Edina Development. In a letter dated April 10, 2003, FORE-M notified Dostal that it was terminating its brokerage agreement with Dostal. FORE-M initially sent the notice of termination to the wrong address. Dostal ultimately received the notice about April 21, 2003. Unaware that FORE-M had signed a purchase agreement on April 8, 2003, Dostal sent FORE-M a protective list of buyers on April 23, 2003, and again on May 10, 2003, to protect his rights under the brokerage agreement. Dostal's lists included Rick Lewandowski, a developer for Edina Development, and Edina Development.
According to the testimony of Michael Murphy, the Chief Manager of FORE-M, Dostal was not involved in the sale to Edina Development. FORE-M and Edina Development closed on the property in March 2004 for a purchase price of $1.6 million. FORE-M paid Dostal no commission on the sale.
Dostal sued FORE-M in May 2004, alleging that FORE-M breached the brokerage agreement by failing to pay Dostal a commission on the sale to Edina Development. On cross-motions for summary judgment, the district court denied FORE-M's motion and granted, in part, Dostal's motion. The court determined as a matter of law that the brokerage agreement was in effect at the time of the sale to Edina Development and that Lewandowski was listed as a prospective buyer on Dostal's protective lists. The evidence presented to the court prior to the summary judgment motions did not disclose that FORE-M had been represented by a different broker in the sale to Edina Development, and the court, in its memorandum setting unresolved issues for trial, indicated that material fact issues remained to determine whether the exclusive-right-to-sell agreement precluded FORE-M from selling its own property.
Following a court trial, the district court ordered judgment for Dostal. The district court determined that, as a matter of law, because FORE-M had sold the property through another broker within the effective term of its brokerage agreement with Dostal, the question of whether the brokerage agreement was an exclusive-right-to-sell agreement or an exclusive-agency agreement was immaterial. The district court concluded that Dostal was entitled to the contractual commission of four percent, amounting to $64,000, and ordered judgment.
FORE-M appeals from judgment, arguing that the district court erred by determining that (1) an exclusive-right-to-sell or exclusive-agency agreement entitles a broker to a commission without specific proof that it procured the sale, and (2) the commission-generating event under the brokerage agreement was the executed purchase agreement, which occurred within the effective term of the brokerage contract, and not the closing, which occurred after FORE-M's notice of termination of the brokerage contract.
D E C I S I O N
The primary goal of contract interpretation is to determine and enforce the intent of the parties. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979). If the contractual intent is expressed in unambiguous language, we rely on the contract's plain meaning. Minneapolis Pub. Hous. Auth. v. Lor, 591 N.W.2d 700, 704 (Minn. 1999). As part of our analysis of a contract's plain meaning, we take into account the context and the obvious purpose of the contract as a whole. Motorsports Racing Plus, Inc. v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 324 (Minn. 2003). The interpretation of an unambiguous contract is a question of law, which we review de novo. Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320, 324 (Minn. 2004).
When a brokerage agreement grants an exclusive right to sell property and provides that a broker will receive a commission on "any sale or contract for the sale or exchange" of the property, "[i]t follows under established law that [the broker] was entitled to a commission on any sale' made during the term of that agreement, no matter by whom arranged, absent any material breach or failure of consideration on [the broker's] part and absent any mutual agreement by the parties to abrogate the contract." Gudim Realty, Inc. v. Hughes, 284 Minn. 39, 42, 169 N.W.2d 216, 218 (1969). On appeal, neither party disputes that the purchase agreement was signed during the effective term of the brokerage contract.
FORE-M contends that the district court erred as a matter of law by concluding that Dostal's right to the contractual commission was not contingent on Dostal either procuring the sale, as required by Carney v. John Hancock Oil Company, 187 Minn. 293, 296, 245 N.W. 367, 368 (1932), or producing a purchaser who ultimately entered into an enforceable agreement with the seller, as required by Lincoln v. Ravicz, 174 Minn. 237, 239, 219 N.W. 149, 150 (1928). But neither Carney nor Lincoln involves a brokerage agreement that provides for an exclusive-agency contract or an exclusive right to sell the property. FORE-M points to no language that imposes conditions on the language granting Dostal the exclusive right to sell the property and to receive a commission. See Gudim, 284 Minn. at 42, 169 N.W.2d at 218 (analyzing agreement that provides exclusive right to sell).
Caselaw recognizes the right of the parties to specify conditions that the broker must meet in order to become entitled to a commission. "[W]hat constitutes a broker's full performance depends on the exact agreement between the broker and the seller." Rosenberg, 685 N.W.2d at 327. But the "great weight of authority is that, unless the broker and his employer have expressly stipulated to the contrary, the broker is entitled to his compensation upon the completion of the negotiations which he undertook." Olson v. Penkert, 252 Minn. 334, 344, 90 N.W.2d 193, 201 (1958).
The plain language of the brokerage agreement establishes that Dostal had an exclusive right to sell the property, and Dostal is consequently entitled to a commission on any sale occurring while the brokerage agreement was in effect so long as he meets the conditions specified in the agreement. The purchase agreement, which led to the sale of the property, was signed during the term of the brokerage agreement; thus, the triggering condition has been satisfied.
FORE-M argues that Dostal's commission is subject to the condition that a closing occur within the time period of the brokerage agreement because the agreement states that Dostal will be paid "at the successful Closing of each lot." The plain language of the brokerage agreement contradicts FORE-M's argument. Under the agreement, Dostal had an exclusive right to sell the property within the one-year period, and the agreement does not state that the commission is contingent on closing the sale of the property within the one-year period. The provision for payment of the commission at closing identifies the time at which Dostal will receive the contractual commission; it does not identify the commission-generating event. The contract establishes that FORE-M is obligated to pay at closing the contractual commission on a transaction for which a purchase agreement was fully executed within the time period of the brokerage agreement. Following termination of the agreement, FORE-M remained obligated to pay the commission for the sale because the purchase agreement for the sale was executed during the term of Dostal's exclusive right to sell. We affirm the district court's judgment that Dostal is entitled to a commission from the sale.
Affirmed.
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