Gallager v. Ruedig: New Hampshire State District Court Reviews Comission Dispute Between Co-Brokers and Buyers Broker

Note: This case is not published in an official reporter and may not be cited as authority. Consult with counsel before relying on this case.

In 1995 a New Hampshire State District Court addressed a commission dispute between co-brokers and a buyer’s broker. The court found that the issue of procuring cause was moot, as the broker who showed the buyer the house was not allowed to participate in the negotiations which were attended by the listing broker and a buyer’s broker. The court further found that a buyer-broker agreement may not automatically defeat the prior efforts of a co-broker who would have otherwise been the procuring cause.

In July and August 1995, Gallagher (Broker) showed residential houses to Herring (Buyer), who was given a written statement which set forth that Broker represented the seller. During a visit to one home, Broker asked Buyer if she would be interested in seeing a home on Ridge Road. After Buyer responded affirmatively, Broker contacted the listing broker to arrange for an appointment. The listing broker indicated she was willing to cooperate by splitting the 5% commission equally. Buyer was late for the appointment. The listing broker had to leave, but left the key to the house with Broker. Buyer and Broker eventually met at Broker’s home and went to see the house on Ridge Road. As they were leaving the car to view the house, Buyer stated to Broker that she had signed a buyer-broker agreement that afternoon with Keeler. Broker indicated that she represented only the seller and could probably work out the commission by only requesting 1%. After viewing the house, Buyer was interested and wanted Keeler to view it. Broker arranged for Keeler to see the home the next day, but was cut out of any further involvement with the sale.

The listing broker took the position that once Buyer stated that she had a buyer’s broker agreement, Broker was no longer entitled to any part of the commission, as the co-broker agreement was terminated. The buyer’s broker took the same position. Broker sued the listing broker for a commission.

The Court found that Broker clearly introduced Buyer to the premises by contacting the listing broker who agreed that she could cooperate in the sale. It was clearly understood that if the sale was consummated that Broker would receive the normal split of 2.5%. The court stated that there were three questions for review. First, can a purchaser freeze out a real estate agent who introduced her to a home by contracting with a buyer’s broker? Second, can a purchaser dealing with a buyer’s broker interfere with a transaction existing between co-brokers. Third, can a broker ignore a co-broker who has shown the property to a prospective purchaser because the purchaser chooses to enter into a buyer’s broker agreement with a third party? The court answered each question in the negative.

Regarding the first question, the Court noted that the dispute was between two brokers who entered into an oral agreement. The court found that there was a binding agreement between the co-brokers. The court also found that when presented with the buyer’s broker agreement, the listing broker had an obligation to determine whether Broker introduced Buyer to the property and to what extent the buyer’s broker and the co-broker would share in the commission.

Regarding the second question, the Court found that it was not fair or equitable to allow a buyer’s broker to interfere with the relationship of a broker who introduces a prospective purchaser to the property. The court noted that Buyer was aware that she signed the buyer’s broker agreement and that the buyer’s broker agreed to call Broker and cancel the appointment. Prior to viewing the house, Buyer had a choice as to whether to view the property. She could have refused, but did not do so. The court found that Buyer was not forced or coerced into viewing the property and did not inform Broker of the buyer’s broker until they arrived at the property. The court inferred that Buyer consented that Broker should share in the commission with her agent, the buyer’s broker.

Regarding the third question, the Court found that the listing broker ignored the fact that they previously consented to the sharing of the commission with Broker. Thus, they were under an obligation to confront the problem and resolve it. The court found that Broker introduced Buyer to the property and if the buyer’s broker issue did not arise Broker would have participated in the negotiations and shared in the commission. The court held that the fact that Broker was not allowed to participate in the negotiations mitigates against any failure on her part to participate in the negotiations. It also made the issues of effective cause or procuring cause moot.

The Court found that there was binding co-broker agreement between Broker and the listing broker at the time Broker introduced Buyer to the home. It held that this agreement was not set aside or modified in any way by the introduction of the buyer’s broker agreement. The court noted that the listing broker was free to negotiate with the buyer’s broker and Broker, but chose not to. The court noted that to hold otherwise would create a situation where any prospective buyer could defeat a co-broker compensation by simply engaging a buyer’s broker. The court held for Broker and ordered payment of $4,153 by the listing broker.

Gallager v. Ruedig, No. 95-CV-281 (N.H. Dist. Ct., Merrimack County, October 31, 1995). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]

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