G C TIMMIS & CO V GUARDIAN ALARM CO
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STATE OF MICHIGAN
COURT OF APPEALS
G. C. TIMMIS & COMPANY,
FOR PUBLICATION
August 24, 2001
9:05 a.m.
Plaintiff-Appellee,
v
No. 210998
Oakland Circuit Court
LC No. 97-549069
GUARDIAN ALARM COMPANY,
Defendant-Appellant.
Updated Copy
October 26, 2001
Before: M.J. Kelly, P.J., and White and Wilder, JJ.
WHITE, J. (dissenting).
I respectfully dissent. The question is whether the circuit court erred in denying
defendant's motion for summary disposition based on the real estate brokers licensing act.
Because the documentary evidence submitted below, taken in a light most favorable to plaintiff,
showed that there were genuine issues of material fact concerning the applicability of the
statutory bar, the court did not err.
MCL 339.2512a provides:
A person engaged in the business of, or acting in the capacity of, a person
required to be licensed under this article, shall not maintain an action in a court of
this state for the collection of compensation for the performance of an act or
contract for which a license is required by this article without alleging and
proving that the person was licensed under this article at the time of the
performance of the act or contract. [Emphasis added.]
The acts or contracts for which a license is required are set forth in MCL 339.2501(d), which
defines "real estate broker." The pertinent part of that definition includes an entity that
sells or offers for sale, buys or offers to buy, leases or offers to lease, or negotiates
the purchase or sale or exchange of a business, business opportunity, or the
goodwill of an existing business for others . . . .
The act thus bars plaintiff from maintaining an action to collect compensation for an act in
selling or offering to sell, buying or offering to buy, leasing or offering to lease, or negotiating
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the purchase or sale of a business, business opportunity, or the goodwill of a business, or its
performance of a contract involving such an act.
Plaintiff provided an affidavit indicating that it seeks compensation for investment
banking services involving advice regarding the home security industry, and the identification of
appropriate target companies for defendant to seek to acquire. Plaintiff was to be paid a success
fee for any target contacted by plaintiff on defendant's behalf that was eventually acquired within
two years of the termination of the parties' agreement. Plaintiff claims that it considered various
enterprises in the home security industry, identified and contacted MetroCell as an appropriate
target for defendant, and had extensive discussions with defendant regarding the nature of the
industry, strategy, pricing, marketing, and the implications of such an acquisition. Negotiations
commenced and were placed on hold. Six months later defendant acquired MetroCell without
notifying plaintiff.
Taken in the light most favorable to plaintiff, there is a genuine issue whether plaintiff
seeks compensation for the performance of an act or contract for which a license is required by
the statute. Plaintiff does not claim compensation for offering to buy MetroCell or for
negotiating respecting a sale. Rather, plaintiff seeks compensation for providing information
concerning the nature of the industry, the approach defendant should take to strengthen its
position in the industry, and the type of business it should attempt to acquire, and for targeting
MetroCell as such a business. Regarding the contract, plaintiff asserts that its agreement with
defendant contemplated that it would provide such advice and identify appropriate targets, and
that it would be entitled to compensation for a target contacted by it that was acquired.
Defendant denies that there was any agreement. Accordingly, one cannot properly conclude as a
matter of law that if there was a contract, it required plaintiff to be licensed, because, at least, it
has not been established that any contract required plaintiff to offer to buy the business or to
negotiate the purchase of the business.
I agree that the mere fact that plaintiff is an investment banking company does not
exempt it from the requirements of the act if the act is otherwise applicable. Nevertheless, the
nature of the services for which plaintiff seeks compensation is made relevant by the express
terms of the act.
Defendant relies on a letter written by plaintiff 's former attorney asserting that plaintiff
represented defendant in negotiations with MetroCell's parent company. Plaintiff asserts that this
characterization was factually inaccurate,1 and that, in any event, plaintiff performed additional
services.
1
In its brief on appeal, plaintiff cites deposition testimony of defendant's principal, Milton
Pierce, in which Pierce answered "no" to the question whether he would classify the dealings he
was having with MetroCell through plaintiff as negotiations. Defendant correctly observes that
this deposition was not presented to the circuit court in support of plaintiff's response to
defendant's motion. However, the deposition was not taken until months after the motion was
heard.
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Lastly, Cardillo v Canusa Extrusion Engineering, Inc, 145 Mich App 361; 377 NW2d
412 (1985), and the cases cited therein do not compel a different conclusion. Relying on Smith v
Starke, 196 Mich 311; 162 NW 998 (1917), and Krause v Boraks, 341 Mich 149; 67 NW2d 202
(1954), the Cardillo Court held that even though the plaintiffs did not negotiate the transaction,
"in finding a purchaser for defendants' assets under a commission agreement, plaintiffs were
subject to the real estate brokers licensing statute and, lacking such a license, plaintiffs' suit for
compensation must fail." Cardillo, supra at 371. Smith and Krause held that finding a purchaser
for another's property is of the essence of brokerage services, Smith, supra at 314, and that an
attorney engaging solely in the function of obtaining a prospective purchaser for an interest in
realty, in conjunction with a broker, is acting as a broker. Krause, supra at 155. Cardillo, Smith,
and Krause all involved actions to recover compensation for the successful procurement of a
buyer for identified property.
In the instant case, following Cardillo, the majority focuses the inquiry on the activities
performed and the character of the property, and then concludes:
Here, plaintiff found business assets for defendant to purchase, conduct
that falls squarely within the definition of activities performed by a "real estate
broker" under the act. Notwithstanding plaintiff 's assertions that its conduct
consisted of "investment banking services" rather than "real estate broker
services," it is clear that plaintiff 's conduct in attempting to locate business assets
for purchase by defendant constitutes action of a "real estate broker" as defined by
statute. [Ante at ___.]
It does not, however, follow from Cardillo and the cases discussed therein that plaintiff 's
conduct in attempting to locate business assets for defendant to purchase constitutes the action of
a real estate broker under the statute. I would not equate the finding of a buyer for identified
property or assets of the client with the rendering of advice regarding the client's position in its
industry and the identification and contacting of business opportunities within the industry that
the client might wisely pursue. Here, plaintiff undertook to provide investment advice and to
identify and contact appropriate targets for acquisition. Cardillo does not characterize these
activities as those of a real estate broker under the statute.
Under all the circumstances, I conclude the circuit court did not err in concluding that
summary disposition was inappropriate. I would affirm the circuit court's conclusion that
genuine issues of material fact remained and remand for further proceedings.
/s/ Helene N. White
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