Foster v. Winner

Foster and Gridley v. Winner (98-489); 169 Vt. 621; 740 A.2d 1283

[Filed 2-Aug-1999]


                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 98-489

                               JUNE TERM, 1999

Foster and Gridley, d/b/a Remax	}	APPEALED FROM:
Champlain Valley Properties and	}
MCM Group, Inc.	                }
     	                        }	Addison Superior Court
     v.	                        }	
	                        }
Irene H. Winner	                }	DOCKET NOS. 109-5-97 & 
				                    111-5-97 Ancv

       In the above-entitled cause, the Clerk will enter:

       Defendant Irene Winner appeals adverse summary judgment decisions in a
  suit by plaintiff  brokers to recover real estate commissions.  Defendant
  contends the Addison Superior Court erred  in:  (1) granting plaintiff MCM
  Group, Inc.'s (Century 21) motion for summary judgment on  Century 21's
  claim for breach of contract and attorney's fees and, (2) granting both
  Century 21 and  Foster and Gridley Inc.'s (Remax) motion for summary
  judgment on defendant's fiduciary breach  and tortious interference
  counterclaims. We affirm.

       This matter arises out of a 1997 real estate transaction.  In
  September 1996, defendant  entered into an "Exclusive Right to Market
  Property" agreement (listing agreement) with Century  21.  The listing
  agreement concerned real property in Cornwall and provided that Century 21
  was  to receive the exclusive right to act as defendant's real estate agent
  for the listing, marketing and  sale of the property for a one year term. 
  The listing price for the property was $250,000, and  Century 21's
  commission under the agreement was six percent if, during the term of the
  agreement,  "the Property is sold or Owner enters into an agreement for the
  sale of the Property and all closing  contingencies to be performed by
  purchaser under such agreement are satisfied in accordance with  the terms
  thereof."  In February 1997, Brian and Theresa Marohnic (the buyers),
  through their  agent Remax, offered to purchase the Cornwall property for
  $255,000, $5,000 above the asking  price.  Defendant accepted the offer and
  on March 1, 1997, entered into a purchase and sale  contract with the
  buyers.  The contract included an addendum indicating that the transaction
  was to  be financed by the seller and was "subject to a seller's credit
  check of the buyer." 

       In March and April 1997, in response to defendant's request for credit
  information, Remax  provided defendant with buyers' 1994, 1995 and 1996
  federal income tax returns, a statement of  the buyers' available cash, and
  a statement of the buyers' income, expenses and assets.  Another  addendum
  was executed by defendant on April 29 to confirm that the purchase and sale
  agreement  included a commercial property, as well as a residential
  property.  The buyers executed the  addendum on May 9, the day of the
  closing.  Although the sale closed, defendant did not pay a  commission to
  Century 21.  



       Century 21 and Remax brought suit against defendant for breach of
  contract and quantum  meruit.  Defendant counterclaimed against both
  plaintiffs for breach of fiduciary duty and tortious  interference with a
  contract.  Thereafter, Century 21 and Remax filed motions for summary 
  judgment on their breach of contract claims and on defendant's
  counterclaims.  Defendant filed a  motion to dismiss Remax's complaint and
  a motion for summary judgment of Remax's claim for  attorney's fees. 
  Defendant appeals the summary judgment decisions decided against her.  She
  does  not appeal the denial of her motion to dismiss Remax's claim for
  quantum meruit, and we do not  address it.     

Century 21's motion for summary judgment

       We examine first defendant's appeal of the court's decision granting
  Century 21 summary  judgment on its claim for breach of contract and
  attorney's fees and on defendant's counterclaims.   Defendant argues that
  Century 21 is not entitled to the commission because the sale was not 
  consummated on the terms in the original purchase and sale agreement, but
  rather, required the  intervention of her son and her attorney to ensure
  the inclusion of two addenda to address  alternative financing arrangements
  and the sale of the commercial property.   Defendant contends  Century 21
  failed to effectively structure the purchase and sale agreement and to
  inform defendant  of critical financial information.  

       Summary judgment should be granted where, giving the non-moving party
  the benefit of all  reasonable doubts and inferences, there are no genuine
  issues of material fact, and the moving party  is entitled to judgment as a
  matter of law.  See e.g., Baldwin v. Upper Valley Servs. Inc., 162 Vt.  51,
  55, 644 A.2d 316, 318 (1994).  Here, two critical facts are undisputed. 
  First, in September  1996, defendant entered into the listing agreement
  with Century 21.  The listing agreement  provided that Century 21 would
  have the exclusive right to market defendant's property for one  year and
  if the property sold due to Century 21's efforts, it would receive a six
  percent  commission.  Second, on May 9, 1996, the property sold.  Defendant
  argues, however, that the  fact the property sold does not, as a matter of
  law, establish that Century 21 procured the sale.  To  be deemed the
  procuring cause of a real estate transaction, there must be a binding
  purchase and  sale agreement between buyer and seller and the broker must
  "dominate the transaction and amount  to something more than an incidental
  or contributing influence."  Kelly v. Beaudoin, 131 Vt. 27,  32, 298 A.2d 831, 834 (1973) (quoting Walbridge Agency, Inc. v. Rutland Hosp., 123 Vt.
  149,  154-55, 186 A.2d 179, 183 (1962)).  
 
       The purchase and sale agreement on which defendant and the buyers
  closed states that  "[s]eller and purchaser agree that [Century 21] as
  listed agency of Seller and Remax . . . brought  about this sale" and
  defendant's statement of disputed facts fails to generate any genuine issue
  on  that point.  That defendant's son consulted with defendant's lawyer to
  prepare  addenda addressing  financing and the inclusion of the commercial
  property does not diminish the fact that Century 21  was defendant's
  exclusive sales agent and that, through its representation, buyer and
  defendant  came together to negotiate on the sale and purchase of
  defendant's property. 
  
       Moreover, despite defendant's awareness of the buyers' financial
  status prior to the closing,  defendant agreed to make alternative
  financing arrangements so that the transaction



  could occur.  Defendant's participation in and agreement to arranging
  alternative financing does  not generate an issue of material fact on the
  question of Century 21's responsibility for procuring a  ready, willing and
  able buyer to purchase the property.  Although defendant's willingness to 
  finance the sale clearly sustained negotiations between defendant and
  buyers, that flexibility in  structuring the transaction was not the
  procuring cause of the sale.  Century 21 brought to  defendant a buyer who,
  when the standard bank financing was no longer an option, was ready, able 
  and willing to arrange financing with defendant in order to consummate the
  transaction.  Defendant  could have terminated her dealings with the buyers
  at any point prior to the closing but did not.    The uncontroverted
  evidence indicates that Century 21 was the procuring cause of the
  transaction  and that, in refusing to pay Century 21 a six percent
  commission, defendant breached the listing  agreement contract.  See Myers
  v. Ambassador Ins. Co., 146 Vt. 552, 557, 508 A.2d 689, 692  (1986) (when
  uncontroverted evidence leads to one conclusion, typically factual issues
  become  questions of law). 
     
       Nor do defendant's counterclaims survive Century 21's motion for
  summary judgment.   Defendant alleged Century 21 breached its fiduciary
  duty by failing to disclose to defendant that the  buyers had been denied
  financing and by failing to ensure a closing on the commercial property as 
  well as the residence.  A broker's obligations as a fiduciary include the
  duty to "disclose all matters  that are material to, and might affect, the
  principal's actions."  Queechee Lakes Rental Corp. v.  Boggess, 158 Vt.
  258, 262, 608 A.2d 39, 41 (1992).  

       Defendant's allegation that Century 21 knew of the buyers' financing
  problems but did not  reveal this information to defendant is unsupported
  by any specific factual allegations whatsoever.   Defendant provides no
  citations or record references to the buyers' alleged rejected financing 
  application, or the date on which Century 21 allegedly became aware of the
  information and when  it communicated this information to defendant.  Even
  assuming arguendo that Century 21 had a  duty to investigate buyer's credit
  worthiness, defendant fails to generate a genuine issue of fact.   See
  Kelly v. Town of Barnard, 155 Vt. 296, 299, 583 A.2d 614, 616 (1990) (trial
  court may enter  summary judgment against adverse party that fails to
  respond to proponent's memorandum and  affidavits with specific facts
  showing existence of genuine issue for trial). 

       Nor does defendant support her argument that Century 21 breached its
  fiduciary duty by  failing to ensure that the commercial property closed
  with any factual or record references.   Again,  defendant's unsupported
  argument does not suffice to raise a genuine issue of material fact.  See 
  Reporter's Notes to 1995 Amendment, V.R.C.P. 56 ("The rule [56(c)] seeks to
  change the present  practice under which generalized claims as to whether
  material facts may be in dispute are  frequently presented on motions for
  summary judgment.").  Indeed, the only fact before us on that  issue is
  that the entire property, including the commercial property, closed on May
  9.  Thus,  defendant has failed to put forth any genuine issues on her
  breach of fiduciary duty counterclaim.   See Middlebury American Legion
  Post No. 27 v. Peck, 139 Vt. 628, 432 A.2d 1183 (1981) (if  party opposing
  summary judgment cannot demonstrate evidence sufficient to create an issue
  at trial,  and moving party has shown that his position is supported by
  evidence, judgment should be entered  for movant).  



       Defendant also argues that Century 21 breached its fiduciary duty by
  placing a lien on the  property and subsequently filing an ex parte
  attachment and trustee action once it became apparent  that defendant did
  not intend to pay the commission.  She argues that in Boggess we
  characterized  the fiduciary relationship between broker and client as
  extending through to the end of the real  estate closing.  See Boggess, 158
  Vt. at 264, 608 A.2d  at 42.  Apparently, the parties have  dismissed the
  attachment by agreement.  In any event, Century 21's agency terminated once
  the  property sold; the duty of loyalty does not survive termination of an
  agent's employment.  See id.;  Restatement (Second) of Agency § 396.
  
       Defendant also counterclaimed that Century 21 tortiously interfered
  with the contractual  relationship between defendant and the buyers.  She
  argues that, although a contract was  performed, it did not contain the
  terms she originally agreed to.  Because of Century 21's   interference
  with the fulfillment of the original purchase and sale agreement, defendant
  argues she  was compelled to agree to terms disagreeable to her.  

       One who intentionally and improperly interferes with the performance
  of a contract between  another and a third person by inducing or otherwise
  causing the other person not to perform is  liable to the other for losses
  resulting from the failure of the third person to perform.   See Williams 
  v. Chittenden Trust Co., 145 Vt. 76, 80, 484 A.2d 911, 913-14 (1984)
  (citing Restatement  (Second) of Torts § 766)).  The tort requires that a
  plaintiff suffer harm as a result of a third  person's failure to perform
  his or her contractual obligations with the plaintiff and that a defendant 
  intentionally and improperly induce the third person not to perform under
  the contract.  See Gifford  v. Sun Data, Inc., 165 Vt. 611, 612, 686 A.2d 472, 473 (1996).  Defendant's argument that the  buyers' alleged failure to
  meet her original financing requirements amounts to a failure to perform 
  does not withstand the fact that defendant closed on the property and the
  sale was completed.   

       In light of our decision affirming the trial court's grant of Century
  21's motion for summary  judgment, we also conclude that Century 21 is
  entitled to attorney's fees.  An award of attorney's  fees is proper where
  a contract makes such provisions.  See Albright v. Fish, 138 Vt. 585,
  590-91,  422 A.2d 250, 254 (1980).  Here, the listing agreement provided
  that "in the event of any litigation  or lawsuit between owner and listing
  agency arising out of, or relating to, this Agreement, the  prevailing
  party will be entitled to the costs and expenses thereof, including
  reasonable attorney's  fees."  Accordingly, Century 21, as the prevailing
  party, is entitled to attorney's fees.  

Remax's motion for summary judgment

       Remax moved for summary judgment on its breach of contract claim as
  well as on  defendant's counterclaims for breach of fiduciary duty and
  tortious interference of contract.  The  court denied Remax's motion on the
  breach of contract claim and granted, sua sponte, summary  judgment on the
  claim in favor of defendant.  Remax acknowledges the court's decision on
  the  breach of contract claim, but does not bring a cross appeal on that
  decision.  Accordingly, we do  not address that portion of the court's
  decision.  The court's grant of summary judgment in favor of  Remax on
  defendant's fiduciary duty and tortious interference counterclaims is, 



  however, before us.

       Remax was the buyer's broker and owed a fiduciary duty to the buyers,
  not to defendant.   Indeed, Vermont Real Estate Commission Rule 4.12(d)
  provides: "The brokerage firm representing  a seller may compensate a
  brokerage firm representing a buyer out of the transaction fee without 
  thereby creating an agency relationship."  Defendant has presented no
  evidence that Remax owed a  fiduciary duty to defendant.  Summary judgment
  was therefore appropriately granted to Remax on  defendant's counterclaim
  concerning breach of fiduciary duty.  

       Nor does defendant's tortious interference counterclaim survive
  Remax's motion for  summary judgment.  As the trial court noted,
  defendant's suggestion that Remax encouraged the  buyers to sell their own
  property and begin plans to move from California in spite of the rejected 
  financing application, is unsupported by any record reference or citation. 
  Defendant essentially  argues that  Remax brought her a buyer who did not
  meet her financial requirements.  By closing  on the sale, however,
  defendant waived those requirements.  To establish liability for this tort, 
  defendant must show that Remax intentionally and improperly induced the
  buyers not to perform  the contract.   See Gifford, 165 Vt. at 612, 686 A.2d  at 473.  In fact, Remax did just the opposite:  it produced  ready and
  willing buyers who, together with defendant, closed on the sale of the 
  subject real estate.  The contract was performed with defendant's approval. 
  We therefore hold that  defendant has presented no genuine issue of
  material fact on her tortious interference counterclaim  against Remax and
  judgment was properly granted as a matter of law.
 
  
	Affirmed. 
		
	BY THE COURT:

	_______________________________________
	Jeffrey L. Amestoy, Chief Justice

	_______________________________________
	John A. Dooley, Associate Justice

	_______________________________________
	James L. Morse, Associate Justice

	_______________________________________
	Denise R. Johnson, Associate Justice

	_______________________________________
	Marilyn S. Skoglund, Associate Justice