Exotex Corp. v. Rhinehart: Wyoming's Highest Court Rules Transaction Must Close before Broker Can Bring Commission Lawsuit against Seller

The Supreme Court of Wyoming has ruled that a broker cannot claim a commission in that state until there has been a completed real estate transaction.

Ronald Brewer, president of Exotex ("Seller"), listed a piece of property partially owned by the Seller for sale with Western United Realty ("Broker"). The listing agreement expired on October 1, 1994. The agreement expired without the Broker locating a purchaser, but the Broker claimed that Brewer had orally agreed to "honor" the contract if the Broker located a purchaser. In 1997, the Broker located a purchaser, who made an offer to purchase which was accepted by Brewer. The offer did not contain the Seller's name. The transaction did not close.

The Broker brought a lawsuit against the Seller, claiming that it was entitled to receive its commission for locating a purchaser. When the Seller did not answer the complaint, a default judgment was entered against the Seller for the commission amount set forth in the listing agreement. The Seller filed a motion with the trial court to set aside the default judgment, which the trial court denied. The Seller appealed.

The Supreme Court of Wyoming reversed the lower court, ruling that the default judgment was void. The court stated that a default judgement could only be entered in this case for a "sum certain," meaning a computation which could be fixed by the allegations made in the complaint. The court stated that in order for the Broker to successfully bring a lawsuit for a commission in Wyoming, the real estate transaction would have to close. Since the real estate transaction was not completed, the court ruled the Broker had no claim for the commission amounts described in the listing agreement. Since the Broker had no claim to the commission amount in the listing agreement because the transaction did not close, the commission was not a sum certain and could not be used as the basis for a default judgment.

The court went on to examine the other theories of recovery, to determine if there was a fixed measure of recovery under any of those theories. First, the court considered the action for "intentional interference with prospective advantage." An award under this theory requires a computation of lost profits, which could not be determined by the commission formula used in making the earlier award and so an award under this theory was not a sum certain.

Next, the court considered quantum meruit, which would be a determination of the value of the Broker's work to the Seller. Again, this figure was not reflected in the commission number used in the default judgment award. Since the default judgment was not a sum certain, the court ruled that the default judgment was void and should have been set aside by the trial court. Therefore, the court reversed the lower court.

One of the justices wrote a special concurrence. In the concurrence, the justice disagreed with the rest of the court that Wyoming law required that the transaction must close before the Broker could sue for its commission. The justice stated that all that was required of the Broker was to provide a "ready, willing, and able" purchaser for the property. However, the justice did agree that the default judgment should be set aside for a variety of reasons, including that the Seller was not a party to the sales contract and also that there was no valid listing agreement at the time the parties entered into the sales contract.

Exotex Corp. v. Rhinehart, 3 P.3d 826 (Wyo. 2000).

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