Anderson-Stokes, Inc. v. Muslimani

WILNER, Judge. This is a suit for commissions on the sale of real estate. It involves two brokers and the sellers of the property. The property in question is the Twin Towers Motel in Pocomoke.

It was owned by a corporation known as Olympic Resorts, Inc., which, in turn was wholly owned by two brothers, Salim (Sam) and Khalil (Lee) Muslimani. The Muslimani brothers had been trying to sell the motel for ²⁶⁹ some time. In the summer or fall of 1987, they had it listed with a Virginia broker. In September, 1987, Sam Muslimani contacted C. Ames Byrd, a broker in Pocomoke trading as Decatur Realty, Inc., and asked him to try to sell the property.

Notwithstanding the Virginia listing, Decatur began to advertise the property. The Virginia listing expired in November. Sam then told Byrd that he would not list the property with anyone but would pay a commission to any realtor who sold it. He specifically asked Decatur to try to sell it and promised a commission “on any prospects that we obtained.” The asking price at that time was $1.5 million; the standard commission was 10% but the expected commission was negotiable.

Decatur continued to advertise the property, not only along the Eastern seaboard but in Baltimore papers as well. It developed a package of material concerning the motel which it sent to several people. On December 21, 1987, one Reynold Palmer called Mr. Byrd. He said that he had seen one of the advertisements and was interested.

Byrd sent him a package of information. On the 27th, at Palmer’s request, Byrd sent him some additional information, including financial statements and an appraisal. On the 30th, Palmer told Byrd that he had a partner, Jarrett, with whom he needed to discuss the matter. Byrd was in contact with Palmer several times during January and February.

Finally, on March 12, 1988, Palmer, Jarrett, and Byrd met at the motel with Sam Muslimani. After going through the motel, a tour that Mr. Byrd said took about three hours, Palmer, Jarrett, and Sam Muslimani reached an agreement and shook hands on a contract; Palmer and Jarrett agreed to pay $1.2 million for the motel and the sellers agreed to a $50,000 commission. Byrd was instructed to prepare a written contract. Jarrett gave him a card with his and Palmer’s names so that he could have the correct spelling.

On March 20, Byrd met with Sam and Lee at Lee’s house in Virginia and went over the terms. Following that meeting, Byrd prepared two contracts, one at $1.2 million with ²⁷⁰ out any seller financing, as instructed, and one at $1.3 million with seller financing. On March 21, the parties met again. Jarrett told the group that he had discussed the matter with his accountant and that, as a result, he and Palmer were unable to pay the $1.2 million.

They counter-offered $900,000, which the Muslimanis rejected. The Muslimanis asked Byrd to continue his efforts, which he did. He called Palmer a number of times to see if he and Jarrett could come up in their offer, asking at one point whether they would pay $1.1 million. Sam Muslimani had told Mr. Byrd that he might be willing to take less than $1.2 million, but no specific figure was mentioned.

Finally, on March 28, Palmer told Byrd that he was no longer interested. Unbeknownst to Mr. Byrd, there was another player in the game. Virginia D’Aquila, a broker with the Ocean City firm of Anderson-Stokes, Inc., had had some past dealings with Mr. Jarrett and, according to her, had mentioned the Twin Towers property to him about a year earlier. In February, 1988, following a call from an intermediary, Ms. D’Aquila made an appointment to look at the property.

Semper paratus, she took with her an exclusive listing agreement which Sam Muslimani signed. Through this agreement, Olympic Resorts, Inc. purported to list the property with Anderson-Stokes for four months, with an asking price of $1.2 million. Mr. Muslimani never mentioned this agreement to Mr. Byrd throughout their dealings. Some time in April, according to Ms. D’Aquila, Mr. Jarrett asked if she could work out financing to enable him and Palmer to buy the motel.

She was aware at the time that Mr. Byrd had shown them the motel, but she decided not to contact Byrd. Instead, she apparently referred Jarrett to a loan officer at Maryland National Bank and then prepared a contract at $1,035,000 ($1,000,000 for the sellers, $35,000 commission for Anderson-Stokes), which the parties signed. Mr. Byrd found out about the sale from street talk and called Sam Muslimani. Muslimani confirmed that he and ²⁷¹ his brother had sold the property.

He told Byrd, however, that when Ms. D’Aquila first informed him that she had some interested buyers, she had refused to disclose their identities and that the contract was in the name of PJ’s Incorporated. It was not until he saw the deposit check that he realized that the buyers were Palmer and Jarrett. Sam said that he would call Anderson-Stokes and that, if the buyers turned out to be Byrd’s prospects, he should get a commission. Muslimani apparently did contact D’Aquila, who called Byrd and informed him that the buyers were her prospects.

Aware that Byrd might be making a claim, the Muslimanis insisted that Anderson-Stokes indemnify them against any such claim, which, at settlement on the property, they did through a written indemnity agreement. As a precautionary measure, in light of this agreement, Ms. D’Aquila had Lee Muslimani sign the listing agreement which, to that point, had been signed only by his brother Sam. His signature was affixed at the time of settlement, in May, 1988. Believing itself to be the procuring cause of the sale, Decatur sued the sellers (Olympic and the Muslimanis) in the Circuit Court for Worcester County for a commission of $35,000.

Olympic and the Muslimanis filed a third-party action against Anderson-Stokes for indemnification. After a non-jury trial, the court entered judgment as demanded by the plaintiff and third-party plaintiffs — $35,000 in favor of Decatur against the sellers and $35,000 in favor of the sellers against Anderson-Stokes. Those judgments were based on two principal findings made by the court: (1) because the seller was a corporation in which Sam Muslimani was neither an officer nor director, but merely a stockholder, the listing contract obtained by Anderson-Stokes was not valid; and (2) Decatur in any event was the procuring cause of the sale. Anderson-Stokes has appealed, challenging both of those findings. ²⁷² The Listing Contract We cannot accept the court’s conclusion that the Anderson-Stokes listing contract was invalid.

The fact is that both Muslimani brothers eventually signed it, presumably on behalf of the corporation; moreover, there was absolutely no evidence in the record to support a conclusion that Sam Muslimani, who signed the contract in February, 1988, was without authority to do so. That was not an issue in the case until the court sua sponte made it one through remarks from the bench, and neither side presented any evidence with respect to it. If the judgments rested on that conclusion alone, we would need to reverse them. But they do not.

The validity of the listing contract is irrelevant, as neither Decatur’s claim against the sellers nor the sellers claim against Anderson-Stokes relies upon it. Decatur’s claim is based solely on the theory that it was the procuring cause of the sale; any arrangement that the sellers had with another broker, whether valid or invalid, is immaterial insofar as their liability to Decatur is concerned. The sellers’ claim is based on the indemnity agreement, not the listing. They paid Anderson-Stokes a commission with the express understanding that they would be indemnified against any liability to Decatur.

The listing contract has no bearing on whether Anderson-Stokes is liable under the indemnity agreement. As Anderson-Stokes does not present any challenge to the validity of the indemnity agreement, the sole issue here is whether the court erred as a matter of law or was clearly erroneous in its findings of fact with respect to whether Decatur was the procuring cause of the sale. Procuring Cause As the circuit court noted, there have been literally dozens of cases in the Court of Appeals dealing with a broker’s entitlement to commissions on the sale of real estate. Where the entitlement hinges on specific contractual language, that language, of course will control.

Where, as here, the entitlement depends not on specific contractual ²⁷³ terms but more generally on the employment of the broker, the issue ordinarily becomes whether the broker was the procuring cause of the ultimate sale. See Md.Real Prop. Code Ann. § 14-105. Unfortunately, like the notion of “probable cause,” the concept of “procuring cause” is deceptively simple, especially when the broker seeking the commission was not directly involved in the final approach or negotiation leading to the signing of the contract of sale.

The Court has expressed the law in a number of ways. In Hampton Park v. T.D. Burgess Co., 270 Md. 269 , 311 A.2d 35 (1973), the Court reviewed some earlier cases on this subject. At 280, 311 A.2d 35 , it noted the long-standing rule, first enunciated in Keener v. Harrod, 2 Md. 63, 71 (1852), that: “[T]he mere fact of the agent having introduced the purchaser to the seller, or disclosed names by which they came together, to treat, will not entitle him to compensation; but, if it appears that such introduction or disclosure was the foundation on which the negotiation was begun and conducted, and the sale made, the parties cannot afterwards, by agreement between themselves, withdraw the matter from the agent’s hands, so as to deprive him of his commission.” (Emphasis added by Hampton Park Court.) See also Steele v. Seth, 211 Md. 323 , 127 A.2d 388 (1956) and Jones v. Adler, 34 Md. 440 (1871). The Court also recited, however, several other expressions from earlier cases.

From Cowal v. Marietta, 216 Md. 222, 228 , 139 A.2d 712 (1958) came the thought that whether a broker’s efforts are to be regarded as the procuring cause of a sale is to be determined not on the basis of how much or how little he did but on the basis of “whether the efforts he did make were in fact the proximate cause of interesting the purchaser, and his ultimate agreement to buy.” From Bearman v. Roland Park Co., 218 Md. 515, 518-19 , 147 A.2d 697 (1959) and Sanders v. Devereux, 231 Md. 224, 231 , 189 A.2d 604 (1963) comes the holding that: “One satisfies ²⁷⁴ the legal test as a procurer of the purchaser if the testimony permits the inference that the sale was accomplished as a result of his action in discovering the purchaser, acquainting him with the property and referring him to the seller for further negotiations.” The real difficulty is not