Agri Affiliates, Inc., v. Bones: Commission Award to Broker Affirmed

Nebraska's highest court has considered whether a broker was entitled to collect a commission from a seller who claimed that broker failed to properly advise tenant of property negotiations, which could have resulted in seller paying lower commission rate.

Calvin R. and Audrey J. Bones ("Sellers") entered into an exclusive listing agreement with Agri Affiliates ("Broker") for ranch land owned by the Sellers on May 24, 1997. The listing agreement provided a commission rate that the Broker would be paid for producing a "ready, willing, and able" buyer, but also provided that "[i]f Tenant is successful buyer within said six months, Broker will close the sale and receive" a lower commission rate.

The Sellers contacted the tenant, Lydic Brothers ("Tenant"), about the property being for sale and also informed them of the list price for the property. The Tenant also testified that it was aware of the "split" commission arrangement. The Broker periodically contacted the Tenant about the property.

On July 17th, the Broker called the Tenant to inform the Tenant that a full-price offer had been received for the ranch. The Tenant allegedly responded by saying "that's a lot of money". The Sellers received the offer on July 21st, and accepted the offer.

On July 22nd, the Tenant called the Sellers to inquire about the property. The Sellers informed the Tenant that they had accepted a full-price offer for the property. The Tenant stated that it would match the offer. The Sellers called the Broker and told the Broker that they now wanted to sell their property to the Tenant. The Sellers' motivation was the lower commission they would pay if the ranch was sold to the Tenant. The other party refused to let the Sellers out of the contract. Thereafter, the Sellers refused to pay the Broker a commission from the sale of the property.

The Broker brought a lawsuit, seeking payment of the full commission set forth in the listing agreement. The Sellers counterclaimed, alleging misrepresentation and breach of fiduciary duty by the Broker, seeking the attorneys' fees as well as the loss of the opportunity to sell the property to the Tenant. The trial court ruled in favor of the Broker, and the Sellers appealed.

The Supreme Court of Nebraska affirmed the rulings of the trial court. The court first considered the Sellers' misrepresentation allegations. In order to recover for a misrepresentation, the Sellers would need to show: a representation was made; the representation was false; the party making the representation knew the statement to be false or made the statement with reckless regard for the truth; the statement was made with the intention that it should be relied upon; the party relied upon the statement; and the party suffered damages through reliance on the statement. The court found that the unchallenged testimony by the Broker that the Tenant had expressed no interest in making a full price offer demonstrated the Broker had not misrepresented the Tenant's interest in the ranch. While the Tenant had thought it would have a chance to match any offer made for the property, the court found there was no evidence that the Broker had made a misrepresentation to the Sellers. Thus, the court rejected this argument.

Next, the court considered the breach of fiduciary duty allegations. The Sellers based this argument on the Broker's failure to actively market the property to the Tenant and also to explain the difference to them in the sale proceeds between a sale to the Tenant and another party. The court rejected the Seller's argument that the Broker failed to explain the difference in the commission splits, finding that this provision was an addendum to the usual listing agreement that had been specifically requested by the Sellers. The court found that the Sellers were aware of the difference in the commission splits, and rejected this argument. The court also found that the Broker had contacted the Tenant at least twice about the property and had satisfied any duty it might have had regarding marketing the property to the Tenant (the court stated it was not necessary to determine whether such a duty even existed). Thus, the court affirmed the rulings of the trial court in favor of the Broker.

Agri Affiliates, Inc., v. Bones, 660 N.W.2d 168 (Neb. 2003).