CAROLANTIC REALTY, INC.,
Plaintiff
v
.
THE MATCO GROUP, INC. and CAN-AM SEVEN PROPERTIES, LLC,
Defendants
Manning, Fulton & Skinner, P.A., by William C. Smith, Jr., for
plaintiff-appellant.
Womble Carlyle Sandridge & Rice, P.L.L.C., by Pressly M.
Millen, for defendant-appellees.
HUNTER, Judge.
Carolantic Realty, Inc. (“plaintiff”) appeals the trial
court's denial of its motion for summary judgment, and the trial
court's grant of summary judgment in favor of The Matco Group, Inc.
(“Matco”) and CAN-AM Seven Properties, LLC (“CAN-AM”) (collectively
“defendants”). We reverse the trial court's grant of summary
judgment in favor of defendants and remand for further proceedings.
The undisputed facts are as follows. Plaintiff, a real estate
company, entered into a contractual brokerage relationship with
Matco, a corporation authorized to enter into listing contracts on
behalf of CAN-AM. Between 1996 and 1999, and pursuant to three
separate listing agreements between plaintiff and Matco, plaintiff
undertook efforts to lease or sell a warehouse space in Raleigh(“the Property”) owned by CAN-AM. The third listing agreement
(“the Listing Agreement”) gave plaintiff the “exclusive right to
Lease and/or Sell the Property” during the “exclusive [one-year]
listing period” from 25 February 1998 through 24 February 1999.
Paragraph 7a(i) of the Listing Agreement states: “The commission
shall be paid upon delivery of the deed or other evidence of
transfer of title or interest.” Paragraph 7b(i) states:
“Commissions shall be earned on execution of a lease by
Seller/Landlord and a Buyer/Tenant in accordance with the following
rates . . . .” Paragraph 8 of the Listing Agreement further
provides, in pertinent part:
If within 45 days after the expiration of the
exclusive listing period, [Matco] shall
directly or indirectly lease or agree to lease
or sell or agree to sell the property to a
party to whom [plaintiff] . . . has
communicated concerning the property during
this exclusive listing period, [Matco] shall
pay [plaintiff] the same commission to which
they would have been entitled had the sale or
lease been made during the exclusive period
. . . .
As noted, the “exclusive listing period” expired on 24 February
1999, and, therefore, the forty-five day “grace period” set forth
in paragraph 8 ended on 10 April 1999.
In the fall of 1998, during the exclusive listing period of
the Listing Agreement, plaintiff communicated with the State of
North Carolina Department of Health and Human Services, Disability
Determination Services (“DDS”) as a possible tenant. The State had
put out a contract seeking to lease property, and had provided
detailed lease specifications to prospective bidders. On behalf ofMatco, plaintiff made a bid for the contract by means of completing
and submitting a “PO-28 Proposers Form” on 12 October 1998. The
PO-28 identified plaintiff as Matco's agent on the bid. In late
October and November of 1998, a representative from the State
visited the property, met with Matco officials, and conducted
“lease negotiations” with defendants. Plaintiff attended the bid
openings on 19 November 1998, at which time Matco's bid was
determined to be the low bid on the contract. The State
subsequently ceased all efforts to locate lease property for DDS,
and architects and designers for defendants and the State began
“intensive space planning efforts . . . to prepare a functional
layout” of the property. The parties determined that DDS would
need approximately 8,000 square feet of additional space, and
defendants “agreed to provide it” and also agreed to reserve an
additional 8,000 to 10,000 square feet of “expansion space” for DDS
adjacent to the leased space.
On 3 December 1998, the State sent defendants a “draft of the
lease document,” which was approved by defendants. Toward the end
of December of 1998, the Council of State officially recommended
that the State lease the property from defendants, and the State
decided not to exercise an option to renew the lease on the
property then occupied by DDS. On 5 January 1999, the Governor and
Council of State, on behalf of the State, officially approved the
execution of a lease agreement for the property in accordance with
the terms of defendants' offer. In January and February of 1999,
the State and defendants engaged in numerous conversations andmeetings regarding the details of preparing for “the State's move-
in,” including the selection of a floor plan. On 26 April 1999,
lease documents were distributed by DDS to defendants. The final
lease agreement between defendants and the State (“the Lease
Agreement”) was executed on 20 May 1999.
On 23 September 1999, plaintiff filed a complaint against
defendants seeking a commission of $476,940.00 under the Listing
Agreement based upon a breach of contract theory or, in the
alternative, a quantum meruit theory, and seeking attorney's fees
under the Listing Agreement. Plaintiff and defendants moved for
summary judgment. On 11 July 2001, the trial court entered an
order denying plaintiff's motion for summary judgment and granting
defendants' motion for summary judgment. Plaintiff appeals.
On appeal, plaintiff argues that the trial court erred (1) in
granting defendants' motion for summary judgment and (2) in denying
plaintiff's motion for summary judgment. Pursuant to N.C. Gen.
Stat. § 1A-1, Rule 56 (2001), a motion for summary judgment is
properly granted if, considering the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
affidavits, there are no genuine issues of material fact and a
party is entitled to judgment as a matter of law. Moore v.
Coachmen Industries, Inc., 129 N.C. App. 389, 393-94, 499 S.E.2d
772, 775 (1998). The moving party bears the burden of showing that
there are no genuine issues of material fact. Id. at 394, 499
S.E.2d at 775. “The evidence is to be viewed in the light most
favorable to the nonmoving party.” Id. We first address whether the trial court erred in granting
defendants' motion for summary judgment. The undisputed facts
establish that defendants and the State did not execute the Lease
Agreement until 20 May 1999, after the “exclusive listing period”
and the additional forty-five day grace period had expired.
However, the undisputed facts also establish that the Lease
Agreement was the direct and proximate result of plaintiff's
efforts to lease or sell the property. The question is whether
this latter fact establishes that plaintiff is entitled to a
commission under the Listing Agreement.
Ordinarily, a broker with whom an owner's
property is listed for sale becomes entitled
to his commission whenever he procures a party
who actually contracts for the purchase of the
property at a price acceptable to the owner.
If any act of the broker in pursuance of his
authority to find a purchaser is the
initiating act which is the procuring cause of
a sale ultimately made by the owner, the owner
must pay the commission provided the case is
not taken out of the rule by the contract of
employment. The broker is the procuring cause
if the sale is the direct and proximate result
of his efforts or services.
Realty Agency, Inc. v. Duckworth & Shelton, Inc., 274 N.C. 243,
250-51, 162 S.E.2d 486, 491 (1968) (citations omitted) (emphasis
added).
Defendants acknowledge the general rule as set forth in
Realty Agency, but argue that it is inapplicable in this case due
to the specific terms of the Listing Agreement. Defendants contend
that the express language of the Listing Agreement indicates that
the parties intended to contract around the general rule and to
condition plaintiff's commission upon the actual execution of alease (or the formation of a legally binding agreement to lease)
within the exclusive listing period or within the grace period.
Based upon our reading of the Listing Agreement, we are compelled
to agree with defendants.
Generally, the parties to a listing agreement may agree that
the broker will only be entitled to a commission upon the happening
of some specified event, such as a consummated transaction. See
Patrick K. Hetrick & James B. McLaughlin, Jr., Webster's Real
Estate Law in North Carolina § 8-11(b), 254 (5th ed. 1999). As
noted above, paragraph 7b(i) of the Listing Agreement states:
“Commissions shall be earned on execution of a lease by
Seller/Landlord and a Buyer/Tenant in accordance with the following
rates . . . .” The Listing Agreement nowhere indicates any
intention to the contrary, such as a provision that plaintiff's
entitlement to a commission would be based upon procuring a party
ready, willing, and able to lease or purchase the property.
Moreover, the language of the grace period provision itself
further supports our conclusion. This provision states that if
plaintiff communicated with a certain party during the listing
period, and that party ultimately purchased (or agreed to purchase)
or leased (or agreed to lease) the property within 45 days after
the end of the listing period, plaintiff would be entitled to “the
same commission to which [it] would have been entitled had the sale
or lease been made during the exclusive period.” (Emphasis added.)
This provision implies that, but for this provision, plaintiff
would not be entitled to a commission where he procured a buyer orlessee during the listing period who did not purchase or lease (or
enter a binding agreement to purchase or lease) until shortly after
the end of the listing period. This supports the conclusion that
the parties intended to contract around the general rule that a
commission would be earned upon the procuring of a ready, willing,
and able buyer or lessee during the listing period.
In a related argument, plaintiff points to the fact that the
Listing Agreement provides that plaintiff is entitled to a
commission if Matco “shall directly or indirectly . . . agree to
lease” the property within 45 days after the end of the listing
period. Plaintiff's argument appears to be that the language
“shall . . . agree to lease” must contemplate something less than
an actual execution of a lease, and that the status of the
relationship between defendants and the State prior to 10 April
1999 (the end of the grace period) established at least an
agreement to lease.
Although we agree with plaintiff that the language “shall
directly or indirectly . . . agree to lease” must contemplate
something less than an executed lease, we believe the parties
simply intended to clarify that a commission would be earned, not
only upon the execution of an actual lease, but also upon the
formation of a binding contract whereby the parties agreed to enter
into a lease at some point in the future. In other words, the
likely reason for including the language “agree to lease” is to
prevent the property owner from being able to avoid paying a
commission by entering a contract to lease during the listingperiod and then delaying the actual execution of the lease until
after the listing period. See Busch v. Eisin, 422 N.E.2d 135, 137
(Ill. App. 1 Dist. 1981). Because we do not believe that, as of 10
April 1999, there was a binding contract between defendants and the
State that they would execute a lease at some point in the future,
we reject plaintiff's argument.
Although plaintiff was not entitled to a commission in this
case pursuant to the language of the Listing Agreement itself, we
nonetheless conclude that summary judgment in favor of defendants
was improperly granted for two reasons. First, plaintiff argues,
and we agree, that there are genuine issues of material fact as to
whether defendants waived the termination date in the agreement.
(See footnote 1)
Although we have been unable to find cases in this state
addressing the specific issue, it is well established in other
jurisdictions and among the authorities in the area that a time
limitation in a listing agreement may be expressly waived by the
property owner, or impliedly waived by the acts of the property
owner:
The time limit of a brokerage contract
may be waived or impliedly extended by the
principal, thereby entitling the broker to a
commission on a transaction consummated after
the technical termination of the agency
contract. A provision in a broker's contract
of employment terminating it as of a given
date is for the benefit of the principal, andlike all other provisions in favor of a party,
may be waived either expressly or impliedly if
the principal chooses.
12 Am. Jur. 2d Brokers § 273, 920-21 (1997) (footnotes omitted),
and cases cited therein; see also 27 A.L.R.2d 1348, 1355-57, and
cases cited therein. Furthermore, whether a time limit has been
waived or extended is a question of fact for the jury, and involves
consideration of
whether the principal accepts the services of
the broker and recognizes the contract as
still in force, whether the principal tacitly
or expressly encourages the broker to continue
efforts to effect a sale, and whether the
prior acts and conduct between the parties
would lead the broker to believe that
adherence to the time frame would not be
insisted upon.
12 Am. Jur. 2d Brokers § 273, 921 (footnote omitted).
Here, defendants admitted in their answer to plaintiff's
complaint that plaintiff “continued to have minimal involvement in
issues related to the lease” after the listing period expired.
Further, plaintiff asserts in its complaint, and defendants deny,
that “Plaintiff continued to work with the State . . . on the lease
at Defendants' request and with their knowledge and express and
implied consent through the date of lease signing, May 20, 1999,
and thereafter.” In addition, plaintiff presented testimony in the
form of an affidavit by Patrick Keenan, plaintiff's employee, that
on numerous occasions, both prior to and after the end of the
listing period, an agent for Matco requested that plaintiff
continue to perform work pursuant to the Listing Agreement, and
further agreed to execute an extension of the term of the ListingAgreement but never actually executed such an extension. We hold
that there was sufficient evidence to establish genuine issues of
material fact as to whether plaintiff might be entitled to recover
a commission from defendants based upon waiver.
Second, plaintiff also argues, and we agree, that there are
genuine issues of material fact as to whether plaintiff is entitled
to recover pursuant to a theory of quantum meruit. Pursuant to
this theory, even if the Listing Agreement expired on 24 February
1999, and even if defendants did not waive the termination date,
plaintiff might still recover in quantum meruit upon a showing that
“(1) services were rendered to defendants; (2) the services were
knowingly and voluntarily accepted; and (3) the services were not
given gratuitously.” Environmental Landscape Design v. Shields, 75
N.C. App. 304, 306, 330 S.E.2d 627, 628 (1985). Based upon the
disputed factual allegations discussed above in reference to the
waiver issue, we believe there were genuine issues of material fact
regarding plaintiff's quantum meruit claim.
Defendants contend that the facts establish that plaintiff may
not recover pursuant to a claim for quantum meruit because there
was an express contract that covered the same subject matter.
Defendants are correct that recovery in quantum meruit is
appropriate only where an implied contract exists, and that, “where
an express contract concerning the same subject matter is found, no
contract will be implied.” Beckham v. Klein, 59 N.C. App. 52, 58,
295 S.E.2d 504, 508 (1982). Here, however, the express contractbetween the parties concerned only services rendered during the
exclusive listing period.
Defendants argue that the express contract concerned not only
services rendered during the exclusive listing period, but also
services rendered during the additional grace period. This is
incorrect. The grace period provision contemplates plaintiff
earning a commission if services rendered during the exclusive
listing period result in a sale or lease during the grace period;
the grace period does not contemplate any additional services
rendered during the grace period. Because plaintiff's quantum
meruit claim is based upon services allegedly rendered after the
termination of the exclusive listing period, and because we hold
that there was no express contract concerning services rendered
after the exclusive listing period, we reject defendants' argument.
We have reviewed plaintiff's various arguments contending that
the trial court erred in denying plaintiff's motion for summary
judgment and find them to be without merit. Thus, we affirm the
trial court's denial of plaintiff's motion for summary judgment,
reverse the trial court's grant of defendants' motion for summary
judgment, and remand for further proceedings.
Affirmed in part, reversed in part, and remanded.
Judges WYNN and THOMAS concur.
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