Binswanger Companies v. Merry-Go-Round Enterprises, Inc. ( 2001 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
THE BINSWANGER COMPANIES, 
Plaintiff-Appellant,
v.
MERRY-GO-ROUND ENTERPRISES,
INCORPORATED; DEBORAH HUNT  No. 01-1378
DEVAN, Trustee; MGR DISTRIBUTION
CORPORATION; MGRR,
INCORPORATED,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
J. Frederick Motz, Chief District Judge.
(CA-00-3192-JFM, BK-94-50161)
Argued: October 31, 2001
Decided: December 6, 2001
Before WILKINS, NIEMEYER, and LUTTIG, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Paul R. Rosen, SPECTOR, GADON & ROSEN, P.C.,
Philadelphia, Pennsylvania, for Appellant. Cynthia Louise Leppert,
NEUBERGER, QUINN, GIELEN, RUBIN & GIBBER, P.A., Balti-
more, Maryland, for Appellees. ON BRIEF: Leslie Beth Baskin,
2 THE BINSWANGER CO. v. MERRY-GO-ROUND ENTER.
Kelly R. Ramsdell, Robert H. Kwait, SPECTOR, GADON &
ROSEN, P.C., Philadelphia, Pennsylvania, for Appellant. Deborah
Hunt Devan, NEUBERGER, QUINN, GIELEN, RUBIN & GIBBER,
P.A., Baltimore, Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Appellant, The Binswanger Companies (Binswanger), challenges
an order of the district court affirming a bankruptcy court order enter-
ing judgment against Binswanger on its claim for recovery of a bro-
kerage commission. Finding no error, we affirm.
I.
Binswanger is an association of companies specializing in broker-
ing commercial and industrial real estate. In late 1995, Binswanger
learned that a Chapter 11 reorganization proceeding involving Merry-
Go-Round Enterprises, Incorporated (MGR) would likely be con-
verted to a Chapter 7 liquidation. Binswanger approached MGR with
the hope of obtaining an exclusive listing contract for the sale of
MGR’s distribution center ("the Facility").
Although MGR had not yet decided to sell the Facility or to
employ Binswanger as its broker, Binswanger, attempting to impress
MGR, immediately began attempts to find a buyer for the Facility.
With MGR’s permission, Binswanger showed the Facility in January
1996 to representatives from The May Department Store Company
(MDSC). Soon thereafter, MGR’s board of directors authorized its
chief financial officer to enter into an agreement with Binswanger to
list the property. The parties began negotiations, but still had not
entered into a final agreement by February 23. On that date, the
THE BINSWANGER CO. v. MERRY-GO-ROUND ENTER. 3
board, anticipating the conversion of the Chapter 11 reorganization to
a Chapter 7 proceeding, revoked its authorization for MGR to enter
into an agreement with Binswanger. On March 1, the anticipated con-
version from Chapter 11 to Chapter 7 occurred, and a trustee, Debo-
rah Hunt Devan, was subsequently appointed.
Several days later, on March 5, Binswanger sent a letter to the
trustee requesting that she employ Binswanger to broker the sale of
the Facility. Binswanger also forwarded a copy of a $15 million offer
from MDSC dated February 27, 1996. This offer, which required that
MGR remove certain equipment from the Facility at a cost to the
seller of approximately four million dollars, was not accepted by the
trustee. Furthermore, the trustee decided to employ Keen Realty
(Keen), rather than Binswanger, to broker the sale.* Counsel for the
trustee sent Binswanger a letter on March 25 taking the position that
the trustee would not be obligated to pay Binswanger any commission
in the event that MDSC eventually purchased the Facility.
By March 25, 1996, MDSC had not made a firm decision regarding
purchase of the Facility, and it was seriously considering several
alternatives. Nevertheless, on that date, MDSC submitted an offer of
$16.5 million (that did not require removal of the equipment) directly
to the trustee. Another prospective buyer, The Gap, subsequently
began submitting offers for purchase of the Facility. Ultimately, the
trustee accepted a $19 million offer from MDSC (that did not require
removal of the equipment) that was dated June 12, 1996. Pursuant to
her agreement with Keen, the trustee paid Keen a $215,000 commis-
sion.
Binswanger filed suit within the MGR bankruptcy proceedings,
alleging, inter alia, that Binswanger was entitled under Maryland
state law to a brokerage commission for the sale of the Facility to
MDSC. Binswanger subsequently moved for summary judgment,
contending that it was entitled to judgment as a matter of law on its
allegation that it was the "procuring broker" for the sale. See Md.
Code Ann., Real Prop. § 14-105 (1996). The bankruptcy court denied
the motion, concluding (1) that there was a genuine issue of material
fact regarding whether Binswanger was the procuring broker, and (2)
*The bankruptcy court subsequently approved Keen’s appointment.
4 THE BINSWANGER CO. v. MERRY-GO-ROUND ENTER.
that even if Binswanger was the procuring broker, it could be pre-
vented from recovering on the basis that the Binswanger brokers who
brokered the sale were not licensed in Maryland, see Md. Code Ann.,
Bus. Occ. & Prof. § 17-516 (2000). See Binswanger Cos. v. Merry-
Go-Round Enters. (In re Merry-Go-Round Enters.), 231 B.R. 241(Bankr. D. Md. 1999). The trustee then moved for summary judg-
ment, arguing that the fact that the individuals who brokered the sale
of the facility were not licensed in Maryland entitled the trustee to
judgment as a matter of law. The bankruptcy court denied that motion
as well, however, concluding (1) that the license requirement would
not prevent Binswanger’s recovery should the bankruptcy court
decide to approve Binswanger as the broker of the sale on a nunc pro
tunc basis, see 11 U.S.C.A. § 327(a) (West 1993); Md. Code Ann.,
Bus. Occ. & Prof. § 17-102(1) (2000), and (2) that there existed a
genuine issue of material fact regarding whether Binswanger was
entitled to nunc pro tunc approval.
After a trial, the bankruptcy court concluded that Binswanger
would be entitled to nunc pro tunc approval only if it was entitled
under Maryland law to a commission. Turning to that issue, the court
found that Binswanger’s introduction of MDSC and MGR was purely
voluntary, that the trustee never employed Binswanger formally, and
that any implied employment ended on March 25, 1996. The court
also determined that Binswanger failed to prove that MDSC was
ready, willing, and able by March 25 to meet the terms under which
the sale was eventually made. On this basis, the court concluded that
Binswanger was not the procuring broker for the offer the trustee
accepted; therefore, the trustee did not impliedly accept Binswanger
as its broker by accepting that offer. Accordingly, the bankruptcy
court granted judgment to the trustee.
The district court affirmed, concluding (1) that Maryland’s licens-
ing requirement precluded any recovery under a procuring broker the-
ory, (2) that the finding that Binswanger was not the procuring broker
was not clearly erroneous, and (3) that denial of nunc pro tunc
approval was appropriate in light of Binswanger’s unjustified failure
to request appointment by the bankruptcy court prior to the sale of the
Facility. See Binswanger Cos. v. Merry-Go-Round Enters., 258 B.R.
608 (D. Md. 2001).
THE BINSWANGER CO. v. MERRY-GO-ROUND ENTER. 5
II.
Binswanger contends that the district court erred in affirming the
bankruptcy court order, arguing primarily that the bankruptcy court
erred in finding that Binswanger was not the procuring broker of the
June 12 offer. Having had the benefit of oral argument and the par-
ties’ briefs, we conclude that the district court correctly decided the
issues before it. Accordingly, we affirm on the reasoning of the dis-
trict court.
AFFIRMED