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Nebraska’s highest court has considered whether a media broker could recover a commission from the sale of a radio station when he did not possess a real estate license.
Richard Chapin (“Broker”) has worked in the radio industry for more than 50 years, and for most of that period he functioned as a “media broker”. A “media broker” works to arrange transactions involving radio properties, and a commission is usually paid to the media broker by the seller from successful transactions.
Over the years, the Broker also became the owner of certain radio stations. One such station was KSYZ-FM (“Station”). In 1999, he sold the Station to Neuhoff Broadcasting-Grand Island, Inc. (“Owner”). The Owner purchased the Station as part of a strategy to obtain a “cluster” of stations serving a particular market, in order to obtain advantages in selling advertising from the resulting economies of scale. However, the Owner’s clustering strategy did not materialize, and so the Owner decided to sell the Station.
The Owner retained the Broker to help sell the Station, although it does not appear that the parties entered into a written agreement. The Broker contacted several parties about acquiring the Station. Eventually, Waitt Media (“Buyer”) entered into negotiations to purchase the property. The Broker served as an intermediary between the parties during negotiations, and eventually a price was agreed upon. The sale involved two documents, in which the Owner assigned all of his interests in the Station’s real estate to the Buyer. The sale involved all of the Station’s assets, including a parcel of land on which the broadcast tower and studio were located. The Broker contacted the Owner about his commission, but the Owner and the Broker could not reach an amicable resolution of the matter. Eventually, the Broker filed suit against the Owner and a jury awarded the Broker the amount of $66,000. The Owner appealed.
The Supreme Court of Nebraska reversed the award to the Broker. The issue before the court was whether the trial court should have entered a directed verdict in favor of the Owner on the grounds that Nebraska law prohibited the recovery of a commission for the sale of real estate by an unlicensed individual. A directed verdict is a ruling by the court that, after hearing the evidence, there is only one ruling that the court could make. The Broker argued he did not need a real estate license because he did not act as a real estate broker, as so defined by Nebraska’s real estate license laws.
Looking at prior Nebraska decisions, the court found a requirement that any individual seeking a commission from a transaction that involved the transfer of real estate, no matter how incidental the real estate was to the transaction, was required to have a Nebraska real estate license. Similar cases where commission lawsuits were rejected by the court involved the sale of a hospital and a wholesale distribution business.
The court acknowledged that while Nebraska’s position is unique among the states (citing decisions to the contrary from New Jersey and Tennessee, allowing recovery of a commission when real estate was incidental to the overall transaction), the legislature had never overruled the court’s earlier decisions and so had indicated its tacit approval of the court’s interpretation of Nebraska law. Therefore, the court followed its earlier decisions and ruled that the Broker could not recover a commission from the sale of the Station, reversing the jury’s award to the Broker.
Chapin v. Neuhoff Broad.-Grand Island, Inc., 684 N.W.2d 588 (Neb. 2004).