The Trusted Adviser September 2009 | Volume 2 - Number 7

ATTORNEYS | Practice Notes



Broker Fees

Burkett & Associates, Inc v Teymer, 2008 AP 1509 (Wis Ct App 2008).

Facts:The Teymers and Burkett & Assoc. entered into a listing contract giving Burkett the exclusive right to sell the Teymers' property. Under the contract, the broker is entitled to a commission if a purchaser was procured during the term of the contract. The broker also is entitled to a commission if the property was sold to a protected buyer within one year after the termination of the contract. A protected buyer is an individual or entity with whom the broker "negotiated to acquire an interest in the Property" during the contract term. To be entitled to a commission, the broker must deliver the protected buyer's name to the seller no later than three days after the expiration of the contract.

Lori Teymer attended an informational open house held by American Transmission Company (ATC). The informational meeting discussed how ATC planned to buy property around a substation it was upgrading and expanding. The first listing contract between the Teymers and Burkett had expired, but the Teymers decided to re-list with Burkett. After re-listing, the Teymers attended another open house and spoke with Thomas Leuker about selling their property to ATC.

Later, Gerald Burkett, the owner of Burkett & Associates, learned of ATC's interest in the Teymers' property on his own. Burkett had one of his employees contact ATC about the property and provide ATC with general information about the Teymers' property. Leuker, who the Teymers had already spoke with, upon hearing of Burketts' listing agreement contacted the Teymers to make sure he could negotiate with Burkett. Lori Teymer approved, and Leuker proceeded to contact Burkett and have more information faxed to him regarding the property. Shortly after that, the Teymers asked Burkett to cancel their listing contract. A termination agreement was drawn up and sent to the Teymers to sign. Along with the termination agreement was a list of protected buyers. ATC was listed as a protected buyer in the agreement. The Teymers signed the agreement and then subsequently sold their property to ATC without paying a commission to Burkett.

Burkett proceeded to sue the Teymers for its commission under the contract arguing ATC was a protected buyer. The trial court concluded ATC was not a protected buyer because Burkett had not negotiated with ATC. The trial court also concluded there had been no "meeting of the minds" between the parties about Burkett's designation of ATC as protected. Therefore, the court granted judgment in favor of the Teymers and Burkett appealed.

Holding:Reversed and remanded. The Wisconsin court of appeals addressed three issues in this appeal: (1) whether Burkett negotiated with ATC; (2) whether the Teymers needed to agree that ATC was a protected buyer during the contract termination; and (3) whether Burkett timely notified the Teymers that ATC was being named as a protected buyer.

With regard to the first issue, the trial court concluded there were contacts between Burkett and ATC about the sale of Teymers' property, but "contacts are not sufficient to constitute negotiation under the terms of this agreement." The listing contract defined "negotiate" as "to discuss the potential terms upon which the buyer might acquire an interest in the property or to attend an individual showing of the property." ATC did not attend an individual showing of the property. However, a Burkett employee had a phone conversation with someone from ATC in which the Burkett employee provided information about the property, including the price. Also, Burkett faxed more information to ATC after Leuker, of ATC, was given permission by Lori Teymer to contact Burkett. The court of appeals concluded the exchange of information between an employee of Burkett and an employee of ATC constituted a "negotiation" because it was a discussion of "the potential terms upon which ATC might acquire an interest in the Teymers' property. The court of appeals cited the price, location and easements on the property as potential terms that might be relevant to the contract.

The second issue was whether the parties must agree that a buyer is a protected buyer based on the listing contract. The listing contract contained no requirement that the parties agree who will be named as protected buyers. Rather, a buyer is protected if he or she "negotiated to acquire an interest in the property during the term of the listing." Therefore, according to the terms of the contract, the broker's designation of protected buyers is a unilateral action that does not require the seller's assent.

The third issue, whether Burkett timely delivered notice that ATC was a protected buyer, was also decided by looking at the listing contract. The Teymers asserted that even if the letter listing the protected buyers was included, it was not delivered within the three days specified by the contract because they received the mailing seven days after the contract was terminated. The court of appeals stated this argument ignores the plain language of the contract: "delivery of documents or written notices related to this Listing may be accomplished by 2) depositing the document or written notice postage or fees prepaid or charged to an account in the U.S. mail or a commercial delivery system, addressed to the Party, at the Party's address." The date of delivery, then, is the date of mailing, not receipt. The record contains a certified receipt for mail from Burkett to the Teymers dated January 26, 2005. The court found this mailing contained a cover letter naming protected buyers. Therefore, Burkett complied with the requirement to deliver the names of protected buyers to the seller within three days of the contract's termination.






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[Last update: 9-2-09]