Author Question: Island Realty (plaintiff/appellant) listed Susan Bibbo's (defendant) property in Loveladies, New ... (Read 74 times)

Evvie72 · **on:** Jun 24, 2018

Island Realty (plaintiff/appellant) listed Susan Bibbo's (defendant) property in Loveladies, New Jersey. The listing agreement was an MLS exclusive right-to-sell effective from May 13, 1998, until November 13, 1998. The listing price was 359,000 and the commission for Island was 6 percent. On July 23, 1998, Ms. Bibbo notified Island that she wanted to remove her house from the market. She confirmed that decision the next day with a letter to the Island offices. On July 27, 1998, Island faxed to Bibbo an unsigned, illegible agreement for sale for the listing price from a buyer produced by another real estate agent. A legible version was faxed the next day, but the actual agreement was not signed by the buyer until July 29, 1998. Bibbo never received a signed copy of the purchase agreement and she did not sign either document that she received. In short, Bibbo refused to sell the property. She also refused demands by Island for its commission. Island filed suit for its full commission of 21,540. The lower court granted Bibbo's motion for summary judgment and Island Realty appealed. Is Island entitled to a commission?

Question 2

The contact rule applies in which of the following states?
A) Alabama
B) Indiana
C)New York
D) Texas

lin77x · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

No, the broker is not entitled to a commission because a ready, willing and able buyer was produced AFTER the listing agreement had been ended. The court says that the broker would be entitled to damages, but the broker did not plead damages or establish that any had occurred. The court doesn't focus on termination because the contract was unclear, but instead rules that even if there was an offer, the seller was free to reject it. In a written statement attached to the dismissal order, Judge Ford expressed her reasons for granting defendant's motion for summary judgment and dismissing the complaint.
The statement recited in part: Mrs. Bibbo did not sign the agreement, since she felt she had removed the house from the market, and further, since she found the terms to be unacceptable; although the offer was for full price, the initial deposit of 1,000 and the additional deposit of 35,900 were not paid, and the offer had not been signed by the prospective purchaser....

The listing agreement does not address the issue of termination in the event that the seller, as is purported occurred here, has a change of heart. For purposes of this motion, however, I am assuming that the listing agreement was in effect and the question is whether or not the right to a commission, setting aside the enforceability of the agreement, ever occurred. It appears that it was within the prerogative of the seller to reject even a full price offer based upon unacceptable terms, in this case, the deficiency of the down payment, and the failure of the purchaser to follow through with the offer. Therefore, there was not a ready, willing and able buyer making a bona fide offer, and thus the right to receive the commission never accrued. Since there is no factual dispute to be resolved, summary judgment is appropriate.

In denying plaintiff's motion for reconsideration, Judge Ford expressed her reasons in an oral opinion:

I agree that somebody could make a full price offer knowing that someone is not going to accept it for whatever reason, and under this theory they could always guarantee themselves a source of income because to say that just as long as somebody offers the full price, then that triggers the commission. I don't think...I agree. What this is governed by is what was the agreement between the parties. And the agreement was that Island Realty would market the property for sale. I think that the ultimate decision about whether or not to accept a contract always resided with the seller of the property and no matter what the circumstances were, the decision about whether or not to sell the property was always reposed with the seller.

I don't think that by entering in a listing agreement that the seller intends to surrender that aspect of the ownership of the property because otherwise they would be, in effect, surrendering all of the decision making for the sale of the property. And I think that's something that goes with the incident of ownership of property that resides with the seller. What they are giving up is the right to market the property. And when there is a meeting of the minds in terms of a transaction and even if that transaction doesn't consummate in an actual sale, if there's a meeting of the minds and if the seller backed out of that, then there would be a right to some type of real estate commission. And I agree that Island Realty would then be entitled to the commission it would have realized on the transaction which in this case would have been approximately 10,000, not the full commission but the commission that they would have realized because they would have split it with the other - they're the listing broker and there was a broker here that actually produced this potential customer. But for whatever reason, there was no meeting of the minds in terms of the terms and conditions of this contract. And there may be some question as to whether or not this particular purchaser rose to the level of being a ready, willing, and able purchaser and whether or not the terms were acceptable to the seller.

But in any event, because of the seller's personal circumstances she decided to take this property off the market. And so long as she did not go to another agency and market it, if she was taking it off the market at that point in time, then I think that it is implicit within her agency agreement that she have the right to do that. This again doesn't do violence to the right of Island Realty to get a commission on a sale or where they produce a ready, willing, and able buyer. But here because there just wasn't a meeting of the minds and because a reasonable seller cold could disagree with certain terms and conditions of this contract, then I think that my initial decision was accurate and that the application for a commission is denied....

In general, the seller is liable for the commission where, during the listing term the realtor was the efficient producing cause of an actual sale. Where the property has been withdrawn from the market before the broker's efforts have produced a buyer who stands ready to consummate the transaction, the owner is responsible to the broker only for such damages as may be established for breach of contract or on a quantum meruit basis for special services rendered in connection with reasonable efforts to sell the property, undertaken before it was withdrawn from the market.

Instead of seeking the full sales commission where no sale had occurred, plaintiff could have sought damages based on breach of contract or on quantum meruit. Even though one cannot prevail on both a contract claim and a quantum meruit (implied contract) claim covering the same services, our liberal approaches to pleading practice permit a party to seek relief on alternative grounds. However, when questioned at oral argument before us on the subjects of quantum meruit and breach of contract damages, plaintiff expressly disavowed any interest in pursuing a claim other than for its full commission, notwithstanding that count four of the complaint, viewed with the customary liberality employed in construing the scope of pleadings. We note, as well, that during the pendency of this matter plaintiff never asserted that it had incurred damages from defendant's alleged breach of contract apart from its loss of the full sales commission. Island Realty v. Bibbo, 748 A.2d 620 (N.J. A.D. 2000).

Answer to Question 2

C