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A South Carolina court has considered whether a jury should consider a broker’s commission claims based on a protection clause in the listing agreement.
James Lewis (“Seller”) owned a commercial property containing a number of businesses. The Seller listed the property for sale with Tammy Coleman Maro (“Salesperson”) in May 2005.
The six-month listing agreement contained a 90 day protection period clause (“Protection Clause”). The Protection Clause stated that if an individual who was introduced to the property during the term of the listing agreement eventually purchased the property within 90 days after the expiration of the listing agreement, then the Salesperson would receive a commission. The agreement also contained a provision allowing the Seller to identify individuals to whom the Seller had marketed the property prior to the listing agreement, but the Seller never identified anyone pursuant to that provision. The agreement also required the Seller to refer all potential buyers to the Salesperson.
The Salesperson marketed the property during the term of the listing agreement, but failed to attract a buyer prior to the expiration of the agreement during November 2005. However, a buyer introduced to the property by the Seller eventually purchased the property. The Salesperson never met the buyer. The first agreement between the buyer and the Seller was in August 2005, but that contract fell through. There were three more purchase agreements between the parties, with the transaction eventually closing in May 2006.
The Seller refused to pay the Salesperson a commission, and so the Salesperson filed a lawsuit. The Salesperson argued that the Seller had breached the listing agreement, while the Seller argued that the transaction had closed outside of the protection period. The case went to trial and at the end of the Salesperson’s case, the court entered a directed verdict in favor of the Seller. The Salesperson appealed.
The Court of Appeals of South Carolina reversed the trial court and sent the case back to the trial court for reconsideration by a jury. A directed verdict is a ruling by the trial court that, as a matter of law, a party has not proven its case. However, if the jury could have concluded that the facts did support the party’s case, then the court must allow the jury to resolve the factual dispute.
The court first looked at the breach of contract allegations. The Seller admitted that he had entered into an enforceable contract with the Salesperson and that he had breached that contract by not fulfilling certain obligations imposed by the contract, such as referring interested buyers to the Salesperson. The court determined that a jury could find that if the Seller had referred the eventual buyer to the Salesperson, the Salesperson would have collected her commission. Therefore, the court reversed the trial court’s directed verdict and sent the breach of contract allegations back to the lower court.
Next, the court considered the breach of contract accompanied by a fraudulent act claim. To recover under this cause of action, a party must show: that the parties had a contract; one party the contract breached the contract with a fraudulent intention; and the breach was accompanied by a fraudulent act. The court found that a jury could determine that the Seller had a fraudulent intent when he entered into a sales contract during the listing period without informing the Salesperson, and so also returned these allegations to the trial court.
Finally, the Salesperson argued that she was entitled to a commission because the listing agreement entitled to her a commission once a sales contract was signed by a buyer during the listing period. The trial court had ruled that the purchase had to close during the listing or the Protection Clause period in order for the Salesperson to earn a commission. The contract stated that a “broker fee shall be earned, due, and payable when an agreement to purchase, option, exchange, lease or trade is signed by [Seller].” Here, the eventual buyer did sign a purchase contract in August 2005, which was during the listing period. The court sent this issue back to the trial court for a jury to consider.
Maro v. Lewis, 697 S.E.2d 684 (S.C. Ct. App. 2010).