Cantrell Realty Company, Inc. v. Simmons First National Bank

ca00-996

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

WENDELL L. GRIFFEN, JUDGE

DIVISION I

CA00-996

April 25, 2001

CANTRELL REALTY CO., INC. AN APPEAL FROM JEFFERSON

APPELLANT COUNTY CIRCUIT COURT

[CIV99-71-2]

V. HON. H.A. TAYLOR, JUDGE

SIMMONS FIRST NATIONAL BANK

APPELLEE AFFIRMED

Cantrell Realty Company, Inc., appeals a grant of a motion for directed verdict in favor of appellee Simmons First National Bank. Appellant argues that the trial court's action mandates reversal because there were questions of fact to present to the jury. A review of the record, the parties' arguments, and applicable law reflects that the trial court properly concluded that the proof submitted by appellant did not present a jury question. Therefore, we affirm.

Viewing the evidence presented by appellant in the light most favorable to appellant, a careful review of the record indicates that appellee employed appellant to sell commercial property located at 2302 West 28th Street in Pine Bluff, Arkansas. Although the partiesentered into three separate, exclusive listing contracts with the first contract beginning in December of 1993, the subject of this dispute is the third and final contract, which took effect on October 25, 1995. This contract, which was prepared by appellant and signed by both parties, included a typewritten expiration date of May 30, 1996. Similar to its predecessors, the contract included language that it "shall be for a period of six (6) months, commencing on the date of execution and continuing on a month-to-month basis thereafter, unless either party elects to terminate this Agreement by giving the other party thirty (30) days written notice of such." In addition, the contract stated that the "owner further agrees to pay Agent the above-stated commissions on any sale or lease of said property negotiated within six (6) months after the expiration or termination of this contract to any party to whom said property was submitted by Agent (or the nominee, representative, or affiliate of such party) during the period of this contract."

According to testimony offered at trial by Jerry Cantrell, owner of Cantrell Realty, after the parties entered the final contract, Dr. Khalid Mahmood came to Cantrell's office seeking approximately 4,000 to 5,000 square feet for a dialysis center. Cantrell told Mahmood that the building was for sale; however a physical therapy clinic leased 9,000 of the 11,700 square feet of space. Following his conversation with Mahmood, Cantrell talked with John Kelly, an agent of appellee. He suggested to Kelly that appellee separate the property into four tracts, listing the total purchase price as $600,000, and the price of the building as $335,000. Kelly agreed and in a letter dated November 8, 1998, gave appellant authorization to do so. Cantrell then told Mahmood in December 1995 that the building was for sale for $335,000, and Mahmood relayed he was interested if the building had space. Next, Cantrell telephoned the owners of the physical therapy clinic in early January andinformed them of the purchase price. However, the physical therapy clinic owners informed Cantrell that they were not interested. Cantrell asked if the clinic would agree to extend its lease for an additional five years if he found someone to share the space. The owners of the clinic agreed, and Cantrell called Mahmood and asked if he wanted to lease the space. Mahmood responded yes, and Cantrell informed Kelly. Mahmood then told Cantrell that he wanted a specialist to view the property to ensure the space was feasible, and Cantrell showed the property to Bill Stanley.

By February 1, 1996, all of the details were worked out to lease the property. Appellee raised the cost per square foot for the existing tenant and negotiated with Mahmood on a monthly lease rate. Cantrell did not know that Mahmood was not signing the lease until the lease closed. At that time, Cantrell found out that Arkansas Renal Care was the tenant. Cantrell had never dealt with Arkansas Renal Care and Mahmood had not previously told him that Arkansas Renal Care would lease the property. Once the lease was signed with Arkansas Renal Care, Cantrell continued to discuss the property with Mahmood. In particular, Mahmood asked Cantrell to complete projections on the property regarding loan amortization, operating expenses, and net cash flow. In April 1996, Cantrell communicated with Mahmood that appellee had raised the price of the property to $510,000. Three days later, Mahmood told Cantrell that Kelly quoted a price to him of $425,000. Cantrell then telephoned Kelly and relayed that Mahmood would probably give $475,000 for the property. Kelly told Cantrell that he had already offered the property to Mahmood for $425,000. At this point, Kelly began negotiating directly with Mahmood regarding the purchase price ofthe property; however Cantrell continued to supply Mahmood with projections and operating expenses.

Cantrell testified that appellee terminated his service by a letter dated August 10, 1996, which stated "as previously discussed, Simmons does not want to renew the above mentioned contract that expired May 30, 1996. In this regard, please remove your for sale sign from the property and return to us any keys to space in the building." After Cantrell was terminated, Mahmood told him that he was close to making an offer on the property and asked him to prepare projections as of October 15, 1996, based on a $450,000 purchase price. Mahmood also asked Cantrell to prepare a contract for him to purchase the property for $450,000. Cantrell subsequently prepared an offer that stated it would terminate if not accepted by October 18, 1996.

In November 1996, the parties met again and Kelly relayed that appellee would not pay a sales fee, but would pay Cantrell a lump sum lease commission if appellant agreed to drop his sales commission. On January 21, 1997, Kelly telephoned Cantrell and told him that Mahmood had given a letter of intent to exercise his right of first refusal, and that Gene Thomason would call Cantrell to discuss payment of fees due Cantrell. On February 4, 1997, Mahmood came by Cantrell's office and asked him if he had worked out anything with Kelly and Thomason so that Mahmood could go ahead and purchase the property. During a lunch meeting on February 26, 1997, Kelly again asked Cantrell if Cantrell expected a sales fee and Cantrell answered "yes." On April 10, 1997, Cantrell received a letter from Kelly advising him that appellee would reopen its discussion with Mahmood regarding hiscontinued interest in the property at his previously proposed purchase price of $450,000 and would pay the lease fee, but not a sales fee. In response, Cantrell wrote Kelly on April 17, 1997, stating that appellee had certain obligations to Cantrell including but not limited to "lease renewal fees, increases in fees as the CPI increases the monthly lease payments, and a sales commission in the event a lessee purchases the property" (emphasis added).

On cross examination, Cantrell acknowledged that he typed, reviewed and executed the third contract, and that the contract clearly included an expiration date of May 30, 1996. Cantrell admitted that he never received an offer from a buyer to buy a part of the property and stated that during the two and a half years he had the listing contract, he did not submit an offer on the property to appellee. Cantrell also testified that he kept records on serious buyers and sellers, and acknowledged that he did not have anything in his file depicting Mahmood as a serious buyer.

Cantrell admitted that Arkansas Renal Care was the lessee of the property and that William Stanley signed the lease for Arkansas Renal Care. He confirmed that there was never a lease contract with Mahmood, that the lease showed Arkansas Renal Care as a limited liability company, and that the lease did not show Mahmood as a member of the company. Cantrell also acknowledged that on February 9, 1996, he sent appellee an invoice for $10,631.25 to cover the services he rendered in obtaining an initial five-year lease with Arkansas Renal Care, and confirmed that he did not list Mahmood as a lessee on the invoice.

Appellee introduced into evidence a letter dated September 25,1996, which Cantrell admitted that he sent appellee. Cantrell testified that after he received the letter fromappellee asking him to remove his signs and to return any keys, he sent appellee a list of prospective purchasers. He explained that Mahmood was not on the list because Mahmood was a tenant and appellees knew about him. However, Cantrell acknowledged that he included Ben Allen Jr.'s name on the list even though Allen Jr. was also a tenant. Cantrell admitted that he testified in his deposition that there were no other prospects as serious as Mahmood but that he did not name Mahmood in his letter setting out all prospects. He conceded that he never mentioned Mahmood on any invoice as a lessee or in any letter as a prospective purchaser.

Cantrell acknowledged that the right of first refusal was never exercised by Mahmood or Arkansas Renal Care because there were never any offers made by anyone acceptable to appellee and admitted that appellee kept him informed of what was going on. Cantrell also testified that appellee paid his lease commission until the sale of the property in November of 1997.

In addition to Cantrell, appellant also presented testimony from Kim Carter, who testified that Mahmood began visiting their office shortly after March 1996. Carter testified that Mahmood's visits would last from ten minutes to an hour and that the visits concerned Mahmood's interest in purchasing property on West 28th Street.

John Kelly testified for appellee that he understood from the beginning that Mahmood would manage and operate a clinic on the property. According to Kelly's testimony, he first became aware that Mahmood was interested in the property when he received a letter from Mahmood on October 8, 1996. Kelly countered Mahmood's offer with $450,000 on October10, but did not hear anything from his counteroffer until Mahmood's attorney contacted him in January or February of 1997. The parties executed a contract to sell the property on October 20, 1997, which was signed by Mahmood on October 22, 1997. On November 11, 1997, seventeen months after the contract with appellant expired, appellee and Mahmood executed a special warranty deed.

At this point, counsel for appellee moved for a directed verdict, arguing that the contract, which was typed by appellant, stated on its face that it expired on May 30, 1996. Appellee also argued that the contract specifically included a provision that an agent would be entitled to a commission on sales of the property negotiated within six months after the contract expired to any party to whom the property was submitted by the agent. Appellant resisted the motion by arguing that appellant was a realtor for the property until it was notified in writing on August 8, 1996, and that appellee's knowledge that Mahmood was interested in the property began when Mahmood told Kelly that he wanted a right of first refusal. The court granted appellee's motion, and this appeal follows.

Points on Appeal and Standard of Review

Appellant argues that the trial court erred in directing a verdict to appellee when a question of fact existed as to whether 1) appellant was relieved of its duties as a broker, 2) appellant was the procuring agent for a sale to Mahmood, 3) appellant was entitled to its sales commission even though the sale took place after appellant's listing contract was no longer in effect, and 4) Mahmood's obtaining a right of first refusal during the listing period triggered appellant's right to a sales commission when he purchased the property.

Motions for directed verdict are proper when the trial court concludes that there is no substantial evidence from which a jury could reasonably return a verdict for the plaintiff. See Jordan v. Sweetser, 64 Ark. App. 58, 977 S.W.2d 244 (1998). Substantial evidence is defined as evidence that is of adequate strength and character to command a definite conclusion without forcing the jury to resort to mere speculation. See id., 977 S.W.2d 244. When determining whether the trial court properly concluded in favor of the defendant that there were no fact questions to present to the jury, we view the evidence introduced by the plaintiff along with all reasonable inferences in a light most favorable to the plaintiff. See id., 977 S.W.2d 244. If we determine that evidence exists that establishes a cause of action beyond speculation or assumption, we will conclude that the trial court committed error by taking the case from the jury. See Ambrus v. Russell Chevrolet Co., 327 Ark. 367, 937 S.W.2d 183 (1997). Using this standard, none of appellant's arguments are persuasive or supported by the facts.

Appellant's Duties as a Broker

Appellant initially argues that the trial court erred when it ruled that there was no substantial evidence to present to the jury as to when appellant was relieved of its duties as broker. As support for its argument, appellant contends that the contract was ambiguous and that the jury could have interpreted the contract as expiring on a certain day but continuing on a month-to-month basis unless either party terminated it by giving a thirty-day notice of their intent to cancel. Appellant also argues that the jury should have been allowed to consider whether appellee's action of sending a letter dated August 8, 1996, served as anotice of termination.

Under Arkansas law, courts determine the construction and legal effect of a written contract, unless the meaning of the contract language is contingent upon certain disputed extrinsic evidence. See Smith v. Prudential Prop. & Cas. Ins. Co., 340 Ark. 335, 10 S.W.3d 846 (2000). When seeking to harmonize conflicting provisions in a contract, we do not give effect to one provision to the exclusion of another provision or neutralize a provision if the provisions may be reconciled. See RAD-Razorback Ltd. Partnership v. B.G. Coney Co., 289 Ark. 550, 713 S.W.2d 462 (1986). Rather, we attempt to determine the intent of the parties from the context of the contract as a whole. See id., 713 S.W.2d 462. Also, our appellate courts recognize the well settled rule of law that when two provisions of a contract are so contradictory that one must acquiesce to the other, a typewritten provision will prevail over a printed provision. See Stacy v. Williams, 38 Ark. App. 192, 834 S.W.2d 156 (1992). We also strictly construe unclear language against its drafter. See id., 834 S.W.2d 156. In the instant case, appellant correctly points out that the contract contained a typewritten provision that listed an expiration date of May 30, 1996, and a printed provision that stated the contract continued month to month unless either party terminated the agreement by providing a thirty-day written notice. However, appellant fails to acknowledge the principle that typewritten provisions prevail over printed ones when the two provisions are entirely contradictory. Based on this rule, appellant's contract with appellee expired on May 30, 1996. Appellant also ignores another basic rule of contract construction, i.e., that unclear language is strictly construed against its drafter. Neither party disputes the fact thatappellant typed the expiration date on the contract form or that appellant drafted the contract form. Thus, any perceived ambiguities must be interpreted in favor of appellee, not appellant.

Although appellant urges that we accept its contention that a jury may have reasonably concluded that the parties intended to allow the contract to expire and then continue on a month-to-month until the contract was expressly terminated, appellant's argument is not supported by the record. It is significant that the lease portion of the agreement states that the agent is entitled to a lease commission earned in the event the agreement expires or is terminated, and that the exchange portion of the agreement provides a commission on any sale or lease of property within six months after the expiration or termination of the contract. Thus, when reading the contract in its entirety there was no jury question that the parties

clearly intended that the contract expire or terminate, not both.

Whether Appellant Procured the Sale and was Entitled to a Commission

Next, appellant argues that there was substantial evidence to present to the jury as to whether it was a procuring cause for the sale to Mahmood and was entitled to a sales commission on the sale. As support for its contention, appellant cites Holland v. Dietz, 267 Ark. 339, 595 S.W.2d 931 (1980), Green v. Tony, 257 Ark. 853, 520 S.W.2d 290 (1975), and McKay and Company v. Garland, 17 Ark. App. 1, 701 S.W.2d 392 (1986).

The rule that a broker who procures a purchaser for an owner of property is entitled to a commission was stated in Holland, supra, when the Holland court noted that an ownermay not deny a commission by failing to enforce a sales contract that the owner voluntarily entered.

In Green, supra, the parties signed an options agreement on May 22, 1970, that obligated Green to pay a commission to Toney and Block Realty if May, a potential purchaser, exercised a six-month option to purchase. May was unable to secure financing within the six months, and as a result, the option expired. However, Toney continued to try to sell the property and found two prospective buyers, which he presented to Green. However, Green rejected the buyers and a few days later agreed to sell the property to May. Green argued that he was entitled to a direct verdict because there was no substantial evidence that the sale was completed within the six months and because Toney's efforts were not a factor in the resulting sale. Our supreme court recognized that a jury question may be presented when it may appear to the jury that a broker was the procuring cause of the sale and that the defendant received a benefit from the broker's service. It then affirmed the trial court's conclusion that the proof submitted presented a jury question as to whether a broker was entitled to a commission.

McKay, supra, involved a situation where the parties entered into an exclusive listing contract that stated the contract would expire in sixty days but provided for a commission if the house was sold within six months as a result of information provided by appellant. Our supreme court concluded that appellee's action of selling the property to the builder was simply a sham conveyance to avoid payment of the commission. The McKay court cited the rule that a realtor may be entitled to a commission even when the sale is made after theexpiration of a listing agreement.

These cases are factually dissimilar to the case at bar. Here, the parties unequivocally limited the time frame during which a commission was due and specifically agreed in the listing contract that appellee would pay appellant a commission "on any sale or lease of said property negotiated within six months after the expiration or termination of this contract to any party to whom said property was submitted by Agent during the period of this contract." The record clearly indicates that the sale to Mahmood took place seventeen months after the expiration of the contract.

Appellant presented no substantial evidence that the parties agreed that a sales commission would be paid following the expiration of the contract, that appellee acted in bad faith, or that appellant considered Mahmood as a prospect. Instead, the record reveals that appellee wrote appellant on August 8, 1996, regarding the expired contract, and appellant responded on September 25, 1996, with a list of prospective purchasers whom it procured and that it would make a claim for a commission fee. Significantly, appellant did not include Mahmood. We conclude that the record contains no substantial evidence that appellant was the procuring cause for the sale to Mahmood.

Right of First Refusal

Finally, appellant argues that the trial court erred in directing a verdict, because Mahmood obtained a right of first refusal during the listing period, which made Mahmood a lessee and triggered appellant's right to a sales commission when Mahmood purchased the property. Again, appellant's argument is not persuasive.

Although appellant presents cases that involve a realtor being entitled to a commission when a lessee exercises an option in a contract during the realtor's exclusive listing agreement, the trial court in the instant case was not presented with evidence that Mahmood exercised a right of first refusal, or that appellant submitted a purchase offer to appellee that Mahamood acted upon to exercise a right of first refusal. Instead, the trial court was presented with undisputed testimony that Arkansas Renal Care continued to lease the property, appellee continued to pay appellant a leasing commission, and that appellant continued to accept commission on the lease after the listing contract expired until November 11, 1997. Cantrell also testified that Dr. Mahmood was never mentioned in any of his correspondence as a lessee or a prospective purchaser.

Based on the foregoing, the trial court correctly granted appellee's motion for directed verdict. Accordingly, we affirm.

Affirmed.

Jennings and Bird, JJ., agree.