Christopher Investment Properties, Inc. v. Cox: Court Outlines Elements of Procuring Cause Claim and quantum meruit in Commission Disputes

In Christopher Investment Properties, Inc. v. Cox, the Court of Appeals of Georgia addressed a commission dispute by a broker against the buyer and seller of property. The court reversed summary judgment in favor of the defendants, noting that there was a genuine question of material fact as to whether the broker was the procuring cause of the sale. The court also held that the broker might be able to recover in quantum meruit.

Cox listed real estate, known as “Whitehall,” with Perkins of Coldwell Banker, an MLS participant. The asking price for the home was $1.85 million and Cox agreed to pay a commission of a certain percentage at closing. Albert, a sales associate with Christopher Investment Properties, Inc. (CIP), provided a notebook containing information and pictures on various properties (including Whitehall) to Sagl, a Canadian resident who sought property in Georgia. Albert showed Whitehall to Sagl and his wife. Albert, on behalf of the Sagls, submitted an offer which was rejected and met with a counter offer. After the initial offer was rejected, Albert again returned to Whitehall with the Sagls. Later, Albert discovered that Sagl and Cox wanted to meet to negotiate, and Albert contacted Perkins to notify her. Albert met Cox and Sagl at a hotel, but at their request, did not participate directly in the negotiations. Thereafter, negotiations stalled, and Albert did not actively participate in any further negotiations, however Albert continued to show homes to the Sagls.

Almost a year after initial negotiations stalled, Cox and Sagl met to discuss Whitehall without Albert’s knowledge. During the negotiations, they discussed Albert’s commission. The court determined that they may have agreed to cut Albert from the deal to reduce the selling price. Nevertheless, Sagl told Cox that Albert was in no way connected with him and was not involved in the sale at all. Cox obtained Perkin’s permission to reduce the percentage of commission and eventually sold Whitehall for $950,000. As part of the sales contract, a clause was inserted to provide that if any commission was owed to Albert, it would be paid by Sagl. No commission was paid to Albert, who sued claiming a commission, or alternatively the value of her services, on the sale. Albert also alleged a conspiracy to deprive her of a commission.

Upon review, the Court noted that when a broker is unable to finalize a sale of property, he or she can still attempt to claim a commission for acting as the procuring cause of the sale. To qualify as the procuring cause, a broker must show that the negotiations were still pending between the prospective purchaser and the one seeking the commission as a result of the broker’s efforts, and that the owner was aware that the negotiations were still pending at the time the sale was consummated. The court stated that “merely locating a prospect and attempting to make a sale, without more, is generally insufficient to entitle an agent to a commission.” Further, “although a broker does not establish he was the procuring cause by merely showing he first located the ultimate buyer, a broker can make out a case if he can show interference by the owner and that he did not abandon his efforts to effectuate the sale.”

The Court found that Albert constantly remained in touch with the Sagls, submitted a written contract on their behalf, continued to attempt to interest the Sagls in the property, and never abandoned them. The evidence also showed that Albert continued to try to persuade the Sagls to buy Whitehall even after the initial negotiations floundered. The court also noted that the record contained evidence which would permit a finding that Cox and Sagl struck a deal to preclude Albert from the negotiations to avoid having to pay Albert a sales commission.

The Court reversed summary judgment, noting that if a jury found that Albert was the procuring cause of the sale, then it could also find that there had been a conspiracy to deprive her of a commission. The court also noted that a finding of conspiracy could lead to punitive damages. Further, the Court made a ruling on the Broker's claim for quantum meruit. The court stated that it had previously held that the “rendering of services valuable to another, which the latter accepted, create[s] an implied promise to pay the reasonable value thereof.” The court also noted that an agent can recover quantum meruit despite not being the procuring cause of the sale. Thus, the court reversed summary judgment on all three claims.

Christopher Investment Properties, Inc. v. Cox, 219 Ga. App. 440, 465 S.E.2d 680 (Ga. Ct. App. 1995).

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