Loyola Federal Savings Bank v. Hill

CATHELL, Judge. Loyola Federal Savings Bank (Loyola), appellant/cross-ap-pellee, appeals from a judgment by the Circuit Court for Baltimore City (Alpert, J., presiding) that Marilee Ann Hill, appellee/cross-appellant, was the procuring cause of purchase by Richmond American Homes of Maryland, Inc. (Richmond American) of real property owned by Loyola and that Hill was entitled to a commission. Appellant Loyola presents three questions: 1. Did the plaintiff fail to prove that she was the procuring cause of the sale of the property? 2.

Did the plaintiff fail to prove a customary commission of ten percent? 3. Did the trial court err in awarding the plaintiff prejudgment interest? Cross-appellant Hill presents three additional questions: Did the court err in not awarding judgment to Hill for a commission on the entire 66 lots covered by the purchase agreement? Did the court err or did it abuse its discretion in awarding prejudgment interest?

Did the court err in not awarding prejudgment interest on the entire purchase price from the date the contract of sale was entered into? ²⁹³ The Facts We include here only those facts that we perceive support the trial judge’s decision and that apparently were accepted by Mm. In the present case, Loyola was attempting to find buyers for sixty-six parcels of property on which it was about to foreclose. There was evidence that an official of Loyola spoke with appellee for a second time shortly before the foreclosure sale and told her that Loyola had not been able to find a purchaser. Ultimately, Loyola acquired the property through foreclosure.

There was evidence that appellee informed the Loyola official with whom she was dealing that she expected a brokerage agreement that would cover any persons who she produced as potential buyers. Loyola faxed information about the property to appellee. Appellee then prepared a summary and a list of potential buyers for the property and began contacting these potential buyers. She produced one potential buyer, Pulte Homes, but it did not purchase the property.

During her discussions with Loyola about Pulte Homes, appellee twice brought up the matter of her commission in order to arrive at an agreed upon commission in the event she procured a buyer, and she proposed a certain commission rate. Loyola, however, never agreed to that specific rate or any other specific rate. Eventually, appellee contacted Richmond American concerning the property. She furnished it with the information about the property that she had received from appellant.

Richmond American had no prior knowledge of the property’s availability. It first received this information from appellee, Appellee then, as an apparent intermediary, faxed Richmond American’s financial information to Loyola. The president of Richmond American requested that appellee set up a meeting with Loyola because he wanted to make an offer for the property. A meeting among Loyola, Richmond American, and appellee was set up for April 13, 1992.

During that meeting, the history of the property, matters relating to costs, Loyola’s request for a cash sale, and site work were discussed. All of ²⁹⁴ the parties then toured the subject site. At the conclusion, Richmond American renewed its expression of interest in the property and informed Loyola that it would be making an offer. After this meeting, appellee again presented to Loyola a “commission agreement.” Loyola again refused to accept the agreement.

Richmond American contacted appellee informing her that it was preparing an offer and asked her to whom it should be sent. She told Richmond American to send it directly to Loyola and faxed Loyola informing it that the offer was en route. Appellee again attempted to get Loyola to agree to a specific commission agreement. Again, Loyola refused.

Richmond American’s first offer was proffered two days after the April 13,1992, meeting. After this point, Loyola and Richmond American continued purchase negotiations, and Richmond American informed ap-pellee as to the status of the negotiations. These subsequent negotiations took place over a three-month period. Ultimately, Loyola and Richmond American agreed to terms. 1 Near the end of the negotiation period, appellee again contacted Loyola’s representative about the commission agreement she had submitted.

She was informed that they had not “gotten around to it.” Because the agreement she had proffered was her “rock bottom” offer and because by this time she was concerned that Loyola was trying to avoid paying her a commission, she withdrew her specific commission offer. At the time she withdrew the offer, it had not been accepted by Loyola. After Loyola received her letter withdrawing her specific commission offer, it offered appellee a $15,000 finder’s fee that she rejected. Appellee later was informed by Richmond American that the parties had entered into a purchase agreement and the agreement’s terms.

Ultimately, Loyola received $981,000 from Richmond American for some of the lots and, because of an escape clause, could not force Rich ²⁹⁵ mond American to purchase any others. Richmond American had, however, deposited $150,000 towards the lots’ purchase that was forfeited to Loyola pursuant to their agreement. Loyola received a total of $1,131,000 in respect to the transaction. We shall first address Loyola’s questions.

Procuring Cause Korzendorfer Realty, Inc. v. Bufalo, 264 Md. 293 , 286 A.2d 142 (1972), was a case involving a salesman’s action against Korzendorfer Realty, Inc. (Korzendorfer), the broker for whom the salesmen worked, for a portion of the commissions the broker received on a sale to a buyer procured by the salesman. The Court noted initially that the broker asserted that the salesman was not the procuring cause of the sale. The Court then discussed the law relative to the broker-seller relationship as applicable to the salesman-broker-buyer relationship. It stated: We had occasion to consider the rule of the Maryland cases in Ricker v. Abrams, 263 Md. 509 [ 283 A.2d 583 ] (1971).

While the broker has the burden of proving that he was the procuring cause, Steele v. Seth, 211 Md. 323, 328 [ 127 A.2d 388 ] (1956), the fact that the negotiations are concluded by others does not necessarily deprive the broker of his right to commissions, Ricker v. Abrams, supra, nor does it matter whether the broker’s services are slight or extensive, whether he showed the property, or whether he participated in the execution of the contract if his efforts were the proximate cause of interesting the purchaser, and of the purchaser’s ultimate agreement to buy, Cowal v. Marletta, 216 Md. 222, 228 [ 139 A.2d 712 ] (1958). Búfalo was an employee of Korzendorfer Realty when Mr. Holland telephoned him, inquiring about the property. Bú-falo acquainted Holland with the property, discussed it with him on two occasions, gave him such materials as were available, and then took Mr. Holland to Mr. Korzendorfer when discussions commenced regarding price. As was said in Sanders v. Devereux, 231 Md. 224, 231 [ 189 A.2d 604 ] (1963): ²⁹⁶ “In order for a broker to establish that he is the procuring cause of a sale of real estate, in the absence of a specific contract, the evidence must show or permit the inference that the sale was accomplished as the result of his action in discovering the purchaser, acquainting him with the property and referring him to the seller for further negotiations.” [citing cases.] 264 Md. at 299-300 , 286 A.2d 142 .

In Hampton Park Corp. v. T.D. Burgess Co., 270 Md. 269, 281 , 311 A.2d 35 (1973), a case also involving whether a broker was the procuring cause of a sale, the Court first discussed several cases and emphasized certain language contained in its prior case of Cowal v. Marletta, 216 Md. 222 , 139 A.2d 712 (1958): “The question of whether a broker’s efforts are the procuring cause of a sale is not to be determined by whether his services are slight or extensive but rather 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.... ” 216 Md. at 228 [ 139 A.2d 712 ] (emphasis added). In Bearman v. Roland Park [Realty] Co., 218 Md. 515 [ 147 A.2d 697 ] (1959), we went on to say: “.... One satisfies 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, (citations omitted).” 218 Md. at 518-19 , 147 A.2d 697 (emphasis added). The Court concluded: In our consideration of this case, we have not been unmindful of the application of Rule 886 which provides: “When an action has been tried by the lower court without a jury, this Court will review the case upon both the law and the evidence, but the judgment of the lower court will not be set aside on the evidence unless clearly ²⁹⁷ erroneous and due regard will be given to the opportunity of the lower court to judge the credibility of the witnesses.” Hampton Park, 270 Md. at 284-85 .

The Hampton Park Court, in holding that no commission was there due, noted that “[t]he meaningless reference to the location of the subject property in the Drake Sheahan study is much too tenuous a link to establish the broker as the ‘primary, proximate and procuring cause of the sale’ made through Godfrey.” Id. at 285 , 311 A.2d 35 . The facts in Hampton Park, when contrasted with the facts in the case sub judice, perhaps distinguish those types of transactions for which commissions are not due from those in which they are due. In Hampton Park, the broker, T.D. Burgess Company (Burgess), obtained a listing agreement wherein Hampton Park Corporation (Hampton Park) promised to pay Burgess a six percent commission on any property “sold by” it. Hampton Park also agreed to pay a commission if the U.S. Post Office bought a specific parcel “as a result of your efforts.” The agreement thus appeared to be a nonexclusive listing.

Subsequently, the broker, an unauthorized member of the Post Office, and the landowner had a meeting about the availability of the property. Some time later, a different authorized representative of the Post Office made an unannounced visit to Hampton Park’s office. Mr. Malloy, the vice-president and secretary of Hampton Park, asked the representative if he had ever heard of the T.D. Burgess Company, and the representative responded that he had not. The Post Office representative learned of the site and contacted the owner on his own, independent of any knowledge of the realtor or the prior contact between Post Office representatives and the realtor.

Mr. Malloy then advised Burgess that he had been independently contacted by some Post Office representative. At all times, Mr. Malloy disclaimed any agreement to pay a commission on the sale resulting from the authorized Post Office representative’s initial contact and negotiations with him. The realtors made ²⁹⁸ no efforts to effectuate the actual sale that ultimately occurred. It was completely independent of their efforts.

Hampton Park was one of the few cases in which the Court of Appeals has held that commissions were not due because a broker was not a procuring cause. Its facts are far different than those in the case sub judice. The case at bar is more akin to Korzendorfer, supra, Cowal, supra, and Sanders v. Devereux, 231 Md. 224 , 189 A.2d 604 (1963), where the Court said: In order for a broker to establish that he is the procuring cause of a sale of real estate, in the absence of a specific contract, the evidence must show or permit the inference that the sale was accomplished as the result of his action in discovering the purchaser, acquainting him with the property and referring him to the seller for further negotiations. Sanders, 231 Md. at 231 , 189 A.2d 604 .

See also Ricker v. Abrams, 263 Md. 509, 517 , 283 A.2d 583 (1971); Bearman v. Roland Park Realty Co., 218 Md. 515, 518-19 , 147 A.2d 697 (1959); Steele v. Seth, 211 Md. 323, 331 , 127 A.2d 388 (1956); Atlantic Richfield Co. v. Sybert, 51 Md.App. 74, 88-89 , 441 A.2d 1079 (1982), aff'd, 295 Md. 347 , 456 A.2d 20 (1983). The Court of Appeals discussed the broker-seller relationship in respect to commissions in Heslop v. Dieudonne, 209 Md. 201, 206-07 , 120 A.2d 669 (1956). The Heslop Court stated: [I]t is claimed that there was conduct from which it could be found that a relationship of principal and agent existed.... When the appellee requested permission to show the property of the appellants to prospective purchasers, both parties obviously realized the type of relationship which was being created between them.... [B]y allowing the appellee to show the property to various people they impliedly contracted to use the appellee as an agent for the purpose of that sale____ [UJnder this agency the appellants were obligated to pay the customary commission---- Likewise, the Court in Weinberg v. Desser, 243 Md. 347, 354-55 , 221 A.2d 66 (1966), in response to an owner’s assertion that ²⁹⁹ the parties had “not” entered into a “contract of employment,” stated: The argument is not valid.

While there was no written or express oral contract of employment, none was necessary because an employment relationship, as the cases show, may be implied from the conduct of the parties. And although the broker has the burden of proving that he was employed, the determination of such a relationship is ordinarily a question of fact for the jury to decide---- ... [S]o also the question of whether the broker was the procuring cause of the lease is ordinarily, as it was here, a question of fact for the jury____ [Citations omitted.] In Anderson-Stokes, Inc. v. Muslimani, 83 Md.App. 267, 574 A.2d 320 , cert. denied, 321 Md. 67 , 580 A.2d 1077 (1990), determining that the original broker was the procurer of the buyer, we distinguished Leimbach v. Nicholson, 219 Md. 440 , 149 A.2d 411 (1959), on a basis not relevant to the case sub judice. We, however, opined: 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 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.... ³⁰⁰ “... [I]f 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.” 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.” 83 Md.App. at 272-73 , 574 A.2d 320 . We hold that that evidence we have discussed above, if believed by the trial judge, as it apparently was, was a sufficient basis for the trial judge’s finding that Hill was the procuring cause of the sale to Richmond American. He did not err in that regard. Customary Commission Rate In Atlantic Richfield Co. v. Sybert, supra, we noted that persons seeking commissions in connection with real estate transactions are required to prove by a preponderance of the evidence, that 1) there was an agreement; 2) they were the procuring cause of the sale; 3) there was a customary and usual brokerage commission; and 4) the customary commission was certain, uniform, and notorious.

In that case, the salesman (an attorney) had met with an employee of the Atlantic Richfield Company (Arco) and with an officer of the ultimate buyer in an attempt to get the two together in respect to purchasing property in Howard County. The salesman, prior to the meeting, informed Arco that he expected a commission. During the meeting, Arco notified the salesman that it had another property for sale and, shortly after the meeting, sent the salesman a letter regarding the other prop ³⁰¹ erties it was offering. The salesman communicated the information in the letter to the purchaser.

The purchaser then contacted the seller directly and purchased the property. The salesman reminded the seller that he was entitled to a commission; the seller refused to pay, and an action for the commission was commenced. We opined: Appellant [Arco] finally contends that the appellees [persons seeking commissions] failed to meet their burden of proving that there was a customary and usual brokerage commission and that such a commission was certain, uniform and notorious. The trial court had before it the testimony of Nippard and Sybert that the agreement between them and Tracy was based upon a promise to pay the usual and customary commissions.

Sybert, a lawyer with over twenty-five years of real estate experience, a member of the Board of Directors of a local bank, and counsel to the local Board of Realtors, testified that the usual commissions in the sale of industrial real estate was 10%. Nippard, also experienced in real estate transactions and counsel for the largest developer in the area, testified to the same effect. The appellees produced as an expert in the field one C. Ellsworth lager, who established his long experience as a real estate dealer in Howard County and the Washington Metropolitan Area. He testified concerning his employment as an expert by the State Highway Administration, his testimony as an expert in various courts of the State of Maryland, and his employment as an expert by a number of financial institutions and law firms in the area involved in similar controversies.

Specifically, Mr. lager stated that he had an agreement with Contee Sand and Gravel Co. for the payment of a 10% commission in negotiating a contract for the sale of an appropriate site for the establishment of a tank farm in the general area of the “Schultz property.” lager stated that based on his experience of over twenty-five years, the payment of a 10% commission computed on the sales price was appropriate in a transaction of the kind here involved and that if a smaller commission was to be paid it would be subject to negotiation usually initiated by ³⁰² the seller. The trial court found that for the relevant period here involved, the usual brokerage commission for the sale of industrial property in the Baltimore-Washington corridor, including Virginia, was 10% of the purchase price, as testified to by lager. Atlantic-Richfield, 51 Md.App. at 91-92 , 441 A.2d 1079 . While there was evidence to the contrary, we concluded: The trial judge had before him sufficient evidence to permit him to conclude that there was in fact a customary commission on the sale of industrial property____ The trial judge had the benefit of seeing the witnesses and of hearing their testimony and we cannot find on the basis of the record that he was clearly erroneous.

Maryland Rule 1086. Id. at 92 , 441 A.2d 1079 . In the case at bar, Judge Alpert credited the testimony of appellee’s/cross-appellant’s expert, as being the better evidence of the customary rate of commissions, saying: As trier of the fact, this court had the opportunity to see the witnesses, evaluate their credibility, and measure their experience. It is beyond question that both Mr. German and Mr. Matthews were truthful, sincere witnesses.

In this “battle of the experts,” the record shows that Mr. German had broader experience in those kinds of real estate sales that would be more comparable to that in the instant case. Accordingly, this court finds that, in the absence of a special provision setting out the rate, that 10% is the customary rate, subject, of course, to negotiation, which obviously must precede the sale of the subject real estate. Although not controlling, the case of Atlantic Richfield Co. v. Cornelius F. Sybert, Jr. et al., 51 Md.App. 74 [ 441 A.2d 1079 ] (1982), is instructive. There, the court affirmed the trial court’s finding that 10% was the customary commission.

As in the instant case, there was conflicting testimony as to the existence of a customary commission. Mr. German, a vice-president of Coldwell Banker Company Realty in charge of its commercial investment, land development, and new homes division, testified on behalf of appel- ³⁰³ lee/cross-appellant. He had been in the real estate business since 1962, and a broker since 1972. He had participated in numerous training activities and taught real estate-related courses since approximately 1986.

He had initiated and was a lecturer at real estate-related programs at the University of Baltimore and had been a lecturer in respect to zoning and commercial real estate at industry symposia. Mr. German had held several high offices in industry-related entities. He had previously testified as an expert on three or four occasions as to the value of real estate and income demographics. He had personally sold, as a salesman or broker, twenty-five to thirty commercial development tracts in the previous ten years.

Mr. German was then qualified as an expert with no objection from appellant. He testified that he was familiar with the tract because his company had been previously involved with it. After general testimony as to the neighborhood and other testimony of a general nature, he testified: THE COURT: But you think you deserve more because it’s a harder object to sell? [A] That’s correct. [Appellee’s counsel:] Based on your 30 years of experience as a real estate broker and your special expertise in connection with commercial properties, do you have an opinion as to what the customary commission would be paid to a broker on the sale in Baltimore City in 1992 in connection with the property subject to the suit and subject to the contract Exhibits 10 and 11? Q Do ... you have such an opinion to a reasonable degree of certaintyt?] A Yes, I do.

Q And what is that opinion? A I believe a sale of this nature at that time and in that location certainly commanded a 10 percent commission. ³⁰⁴ Q Now what are the reasons or basis for saying that the customary commission was 10 percent? A Well, first it’s the — I’d always understood the customary expected commission of a realtor in the sale of a property of this nature, number one. But more importantly, I think when you reflect on the period of time that this— that in our area, the economic conditions, coupled with the ... location of the property, that the sale price certainly was an almost insurmountable task, and I think certainly deserved a full commission.

Q Now in your— THE COURT: Is 10 percent the maximum? Is there a maximum? THE WITNESS: No.... I’ve been involved in higher commissions.

THE COURT: When you said period of time, do you mean the year— THE WITNESS: I meant 1992, yes. THE COURT: Okay. THE WITNESS: Because of the economic conditions at that time. That is, probably half of the building community was not financeable and the half that was financeable was extremely apprehensive about known — I mean, about personal signatures for AD & C Loans,[ 2 ] which many of the lenders were requiring.

Q Mr. German, could you state to the Court any other additional bases for your opinion of the 10 percent customary commission, in addition to what you’ve already testified to? A Yes. I performed considerable research, personal research as to what other brokers in the area had received in commissions for sales of this type and nature. ³⁰⁵ Q In addition to your research, since engagement in this case, could you tell the Court what if any basis for your opinion as a result of things that you learned or studied on this subject matter over the years? A With regard to commissions?

Q Regarding the 10 percent customary commission. A ... [M]y recollection has always been 10 percent commission. Q I didn’t want to interrupt. Anything else?

A It’s been my ongoing, continuing experience and understanding that that is [the] customary commission for the sale of this type of property. Q Based on your experience, what is expected on the part of a broker in the marketing of property, such as the one in this case, in consideration for payment of a commission? A As I stated, 10 percent. Q Now have all of your sales and your listings for commercial property, have they all been at a 10 percent commission, which you testified is the customary commission for this type of property?

A No, they have not. Q And why is that? A For various reasons that I’ve alluded to earlier. Oftentimes if I was to receive the sale of the houses on the property to be subdivided, I would consider receiving less of a commission.

If it was a client who had given me a continuous stream of business, I would consider a less commission. If it was a client I had been pursuing and trying to initiate a stream of business with, I would consider a lesser commission. There are circumstances. The desirability of the particular parcel, whether it would be desirable to my ³⁰⁶ clients.

Many factors would go into the consideration of negotiating a lesser commission. Q And in or about 1992, were you involved in the listing and/or the sales of development land for which you had been paid commission of 10 percent? A Yes. ... It’s a customary and how does — how does one arrive at a customary commission and it’s based on history.

It’s based on what the market will accept, it’s based on what the public in general understands is a fair and reasonable compensation for the performance of a service. Judge Alpert ultimately clarified the testimony: [THE COURT:] Is this a fair statement? Correct me if I’m wrong. You have a commission that you’d like to get.

It’s about 10 percent. But it’s always subject to negotiation between the parties. If the deal warrants something less, like one broker got 1.5 percent because it was $17 million. Other brokers paid whatever it may be, less because they want to get a new client or they want to keep a client who’s given them a lot of business.

Is that a fair statement? That’s the impression I have. THE WITNESS: I think that’s reasonably clear. As is apparent from the trial court’s opinion, it accepted the testimony we have reproduced above.

The trial court credited Mr. German’s expert testimony, which was introduced by appellee/cross-appellant. The trial judge had the opportunity at the trial to observe the witness’s demeanor, judge his credibility, and pass upon the weight to be given to his testimony. See DiTommasi v. DiTommasi, 27 Md.App. 241, 247 , 340 A.2d 341 (1975); Rule 8-131(a). He is not required to accept the testimony of the witnesses, Stefanowicz Corp. v. Harris, 36 Md.App. 136, 147 , 373 A.2d 54 , cert. denied, 281 Md. 738 (1977), and may credit all parts, or no part, thereof, Staley v. Staley, 25 Md.App. 99, 108 , 335 A.2d 114 , cert. denied, 275 Md. 755 ³⁰⁷ (1975).

The trier of fact is not obliged to believe all that he or she hears, Phelps v. Goldberg, 270 Md. 694, 705 , 313 A.2d 683 (1974), and is free to believe only a portion of the evidence of each side, Racine v. Wheeler, 245 Md. 139, 144 , 225 A.2d 444 (1967). Stated otherwise, the trial judge may believe or disbelieve, credit or disregard, any evidence introduced, and a reviewing court may not decide on appeal how much weight must be given as a minimum to each item of evidence. Great Coastal Express, Inc. v. Schruefer, 34 Md.App. 706, 724-25 , 369 A.2d 118 , cert. denied, 280 Md. 730 , 371 A.2d 1104 (1977). When referring to the credibility of a witness, it is meant to relate to the weight to be given to the evidence by the trier of fact.

Eichberg v. Maryland Bd. of Pharmacy, 50 Md.App. 189 , 436 A.2d 525 (1981), cert. denied, 292 Md. 596 (1982). We acknowledge that there was conflicting evidence and that appellant/cross-appellee proffered contrary expert testimony. It is, however, primarily the trial court’s function to assess credibility. It is rare that a credibility battle can be won on appeal after it has been lost below.

We cannot say that Judge Alpert clearly erred in finding that the customary commission rate, in the absence of an express agreement for property such as that at issue in the case sub judice, is ten percent and thereafter basing his award on that figure. Prejudgment Interest We address all of the prejudgment interest issues raised by both parties in one discussion. The trial court awarded appellee/cross-appellant prejudgment interest from the time suit was filed. Appellant/cross-appellee argues that no prejudgment interest should have been awarded because