James F. Cook, Jr., D/B/A Cook Properties v. Consolidated Stores Corp., Belz Investco, L.P., Urco, Inc., Union Realty Co. LTD., and South Plaza Co. ( 1998 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
FILED
JAMES F. COOK, JR., )
July 1,1998
d/b/a COOK PROPERTIES, )
) Cecil W. Crowson
Plaintiff/Appellant, ) Appellate Court Clerk
)
VS. ) Davidson Chancery
) No. 94-1989-III
CONSOLIDATED STORES CORP., )
BELZ INVESTCO, L.P., )
URCO, INC., ) Appeal No.
UNION REALTY CO., LTD., and ) 01A01-9605-CH-00245
SOUTH PLAZA CO., )
)
Defendants/Appellees. )
APPEAL FROM THE CHANCERY COURT FOR DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE ROBERT S. BRANDT, CHANCELLOR
For Plaintiff/Appellant: For Defendant/Appellee
Consolidated Stores Corp.:
Hugh C. Howser, Jr.
Kathryn J. Ladd Karyn C. Bryant
Trabue, Sturdivant & DeWitt Boult, Cummings, Conners & Berry
Nashville, Tennessee Nashville, Tennessee
For Defendants/Appellees Belz,
URCO, Union Realty, and South Plaza:
John M. Gillum
John W. Heacock
Manier, Herrod, Hollabaugh & Smith
Nashville, Tennessee
AFFIRMED AND REMANDED
WILLIAM C. KOCH, JR., JUDGE
OPINION
This appeal involves a dispute over a real estate commission on four retail
properties in Memphis. After a former client leased these properties, a real estate
broker filed suit in the Chancery Court for Davidson County seeking a commission
from its former client and the lessors of the four properties. The trial court granted
the former client’s motion for summary judgment and, following a bench trial,
dismissed the broker’s claims against the four lessors. On this appeal, the broker
asserts that the trial court erred by granting his former client’s summary judgment
motion and that the evidence preponderates against the trial court’s dismissal of his
claims against the four lessors. We have determined that the trial court properly
granted the summary judgment motion and that the evidence does not preponderate
against the trial court’s judgment in favor of the four lessors.
I.
In 1988, Consolidated Stores Corporation retained James F. Cook Jr., a
Nashville commercial real estate broker, to locate retail space in Nashville for two of
its “Big Lots” stores. While these negotiations were progressing, Consolidated Stores
authorized Mr. Cook to survey the market in Memphis because Consolidated Stores
was considering opening four or five stores there. By July 1990, Mr. Cook had
identified fifteen possible sites in Memphis, eight of which belonged to Belz
Enterprises, the lessor of the property on which one of the Nashville Big Lots stores
was located. In August 1990, Consolidated Stores informed Mr. Cook that it would
not be ready to consider the Memphis market until the Spring of 1991.
Mr. Cook continued to look for suitable retail space in Memphis for
Consolidated Stores and in October 1990 presented Consolidated Stores with
proposed leases prepared by Belz Enterprises for four locations. Consolidated Stores
again informed Mr. Cook that it was delaying its expansion into Memphis. In April
1991, representatives of Belz Enterprises and Consolidated Stores met to discuss
possible retail locations in Memphis but reached no agreement. In November 1991,
Consolidated Stores informed Mr. Cook for the third time that it had postponed
expanding into Memphis and all discussion between Consolidated Stores and Mr.
Cook ended.
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In November 1993 Consolidated Stores and Belz Enterprises negotiated a
renewal of the lease for one of the Nashville Big Lots stores. During these
negotiations, Belz Enterprises encouraged Consolidated Stores to reconsider its plans
to expand to Memphis, and the parties renewed their negotiations without involving
Mr. Cook. In early 1994, Mr. Cook inquired into Consolidated Stores’s expansion
plans in Tennessee and specifically in Memphis. On April 4, 1994, Consolidated
Stores informed Mr. Cook that it had leased four properties in Memphis from Belz
Enterprises on February 17, 1994. Mr. Cook demanded a commission on these
transactions, and when he did not receive one, he filed suit against Consolidated
Stores and the four Belz-related companies that had leased the Memphis space to
Consolidated Stores.1
The trial court granted a summary judgment for Consolidated Stores on the
ground that there was no contractual or other basis for Mr. Cook’s claim that
Consolidated Stores owed him a commission. Following a bench trial, the trial court
entered a judgment for the four Belz-related companies based on its conclusion that
Mr. Cook had not been the procuring cause of these leases. Mr. Cook argues on
appeal that he performed enough work bringing Consolidated Stores and Belz
Enterprises together that these parties, jointly and severally, owe him a commission.
II.
THE CLAIMS AGAINST CONSOLIDATED STORES
The trial court summarily dismissed Mr. Cook’s complaint against
Consolidated Stores because of the lack of evidence of an express or implied contract
between Consolidated Stores and Mr. Cook or any other basis for recovery. While
Mr. Cook concedes that there was no oral or written contract, he argues that summary
judgment was improper because the facts could support a finding that the parties had
an implied contract.
A summary judgment is proper if the moving party demonstrates that there are
no genuine issues of material fact and that he or she is entitled to a judgment as a
matter of law. See Tenn. R. Civ. P. 56.04; Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.
1997). When ruling on a motion for summary judgment, the trial court must take the
1
The companies were Belz Investco, Urco, Inc., Union Realty, and South Plaza Company.
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strongest legitimate view of the evidence in favor of the non-moving party, discard
all countervailing evidence, and draw all reasonable factual inferences in the non-
moving party’s favor. See Mike v. Po Group, Inc., 937 S.W.2d 790, 792 (Tenn.
1996); Byrd v. Hall, 847 S.W.2d 208, 210-11 (Tenn. 1993). A court should grant a
summary judgment only when the undisputed facts reasonably support one conclusion
– that the moving party is entitled to a judgment as a matter of law. See McCall v.
Wilder, 913 S.W.2d 150, 153 (Tenn. 1995); Carvell v. Bottoms, 900 S.W.2d 23, 26
(Tenn. 1995).
The only facts supporting any kind of relationship between Mr. Cook and
Consolidated Stores are: (1) that Consolidated Stores agreed to allow Mr. Cook to
survey the Memphis market prior to the first contact between Consolidated Stores and
Belz Enterprises, (2) that Consolidated Stores negotiated briefly with Belz Enterprises
in 1991 based on the earlier proposals Belz Enterprises had submitted to Mr. Cook,
(3) that in 1990 Mr. Cook located two of the properties that Consolidated Stores
eventually leased in 1994, and (4) that Consolidated Stores intentionally did not
involve Mr. Cook in its 1994 negotiations with Belz Enterprises that led to the four
leases.
An implied-in-fact contract is one that is inferred from the parties’ conduct
instead of from an oral or written agreement. See V.L. Nicholson Co. v. Transcon Inv.
and Fin. Ltd., 595 S.W.2d 474, 482 (Tenn. 1980). It arises when circumstances,
including the ordinary course of dealings and custom, show that the parties mutually
assented to contract, see Mefford v. City of Dupontonia, 49 Tenn. App. 349, 356, 354
S.W.2d 823, 826 (1961), and that the parties intended to contract. See Weatherly v.
American Agr. Chem. Co., 16 Tenn. App. 613, 623, 65 S.W.2d 592, 598 (1933).
When a contract is implied-in-fact, the courts will impose a corresponding duty
to pay reasonable compensation. However, a promise to pay will only be implied
when the work was performed under circumstances from which the person seeking
payment could reasonably expect compensation from the benefitted party. See V.L.
Nicholson Co. v. Transcon Inv. and Fin. Ltd., 595 S.W.2d at 482. In real estate
disputes, the courts are reluctant to impose contractual liability for a broker’s services
when they are thrust upon unwilling recipients. See Billington v. Crowder, 553
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S.W.2d 590, 595 (Tenn. Ct. App. 1977). And although we have expressed some
willingness to imply a promise on the part of the purchaser to pay a commission when
the real estate agent is unable to collect from the seller, see Williams v. Millsaps, No.
03A01-9406-CH-00229, 1995 WL 131343, at *6 (Tenn. Ct. App. Mar. 28, 1995),
perm. app. denied (Tenn. Aug. 28, 1995), this is only so in situations where there is
a legally enforceable commission agreement between the seller and agent and the
purchaser, without a valid reason, interferes by preventing the sale.
The undisputed facts in the record do not provide circumstances from which
either the trial court or this court can imply the parties’ mutual assent to contract. Mr.
Cook testified that Consolidated Stores never discussed with him or agreed to pay
him a commission and that he never expected Consolidated Stores to pay him a
commission. At all times during these negotiations, Mr. Cook testified that, as in past
transactions, Belz Enterprises would pay his commission if the parties reached an
agreement. Similarly, Consolidated Stores’s primary representative testified that he
believed that Mr. Cook worked for Belz Enterprises and that it is industry custom that
the lessor pays the agent’s commission. Thus, Mr. Cook never had a reasonable
expectation of payment from Consolidated Stores, and the trial court correctly
declined to find an implied contract based on the undisputed facts.
III.
THE CLAIMS AGAINST THE BELZ-RELATED COMPANIES
Mr. Cook also takes issue with the trial court’s dismissal of his claims against
the four Belz-related companies that leased the Memphis retail space to Consolidated
Stores in 1994. He contends that he was the procuring cause of these leases because
he introduced the parties, provided information that became the foundation for the
lease agreements, and cemented Consolidated Stores’s interest in the Memphis
market. We have determined that the evidence does not preponderate against the trial
court’s conclusion that Mr. Cook was not the procuring cause of the leases between
Consolidated Stores and Belz Enterprises.
Real estate brokers earn their commission by producing a purchaser or lessee
acceptable to the seller or lessor who is ready, willing, and able to buy or lease on the
seller’s or lessor’s terms. See Parks v. Morris, 914 S.W.2d 545, 548 (Tenn. Ct. App.
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1995). The right to collect a commission depends on whether the broker actually
made the sale or lease or was the efficient, procuring cause of the sale or lease. See
Pacesetter Properties, Inc. v. Hardaway, 635 S.W.2d 382, 390 (Tenn. Ct. App.
1981); Robinson v. Kemmons Wilson Realty Co., 41 Tenn. App. 297, 318, 293
S.W.2d 574, 583 (1956).
A broker is not entitled to a commission merely because he or she introduced
the parties or showed property unsuccessfully to the ultimate purchaser. See Miller
v. Jones, 54 Tenn. App. 31, 36-37, 387 S.W.2d 627, 630 (1964). If the broker
abandons the listing or fails to furnish a ready, willing, and able purchaser during the
term of the agency, the broker is not entitled to a commission, and the owner may sell
the realty to a prospect who originated with the broker. See Pacesetter Properties,
Inc. v. Hardaway, 635 S.W.2d at 388-89; Miller v. Jones, 54 Tenn. App. at 36, 387
S.W.2d at 630.
A broker may be entitled to collect a commission if the owner delays the
consummation of the sale in bad faith until after the agency terminates in order to
avoid paying a commission to the agent. See Robinson v. Kemmons Wilson Realty
Co., 41 Tenn. App. at 317, 293 S.W.2d at 583. However, we have held that an owner
is not acting in bad faith by responding to the later overtures of a purchaser without
the broker’s participation when the broker has failed to procure a contract and the
negotiations have broken off. See Pacesetter Properties, Inc. v. Hardaway, 635
S.W.2d at 390. Similarly, when negotiations begun by a broker have broken off
without an agreement, and the purchaser reopens negotiations after a substantial lapse
of time and closes the deal on terms different from the initial proposal, the broker is
not the procuring cause of the sale. See Pacesetter Properties, Inc. v. Hardaway, 635
S.W.2d at 389.
We hold that the evidence does not preponderate against the trial court’s
judgment. Even though Mr. Cook helped solidify Consolidated Stores’s interest in
the Memphis market, he did not bring an offer from a potential lessor that met
Consolidated Stores’s terms. He was never able to bring the parties to an agreement
acceptable to both. The discussions concerning Consolidated Stores’s entrance into
the Memphis market broke off after Consolidated Stores informed Mr. Cook for the
fourth, and final, time that the company was not expanding into Memphis. For two
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years, there was no contact between the parties and Mr. Cook did not actively seek
to renew the negotiations. After this substantial lapse of time, Consolidated Stores
and Belz Enterprises reinstituted negotiations for Memphis properties after doing
business on another property in Nashville. The eventual agreement between
Consolidated Stores and Belz Enterprises involved two of the properties Mr. Cook
originally proposed to Consolidated Stores, but they were in different locations in the
shopping centers, had different square footage, and different lease terms and
conditions. The remaining properties that Consolidated Stores leased were not
proposed by Mr. Cook. Accordingly, we hold that the evidence does not
preponderate against the conclusion that Mr. Cook was not the procuring cause of the
lease transactions between Consolidated Stores and Belz-related companies.
IV.
We affirm the trial court’s decisions to grant the summary judgment dismissing
Mr. Cook’s complaint against Consolidated Stores and to award a judgment in favor
of the four Belz-related companies. We remand the case to the trial court for
whatever further proceedings may be required, and we tax the costs of this appeal to
James F. Cook, Jr. and his surety for which execution, if necessary, may issue.
______________________________
WILLIAM C. KOCH, JR., JUDGE
CONCUR:
____________________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION
____________________________________
BEN H. CANTRELL, JUDGE
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