Read full decision: Eskenazi v. Slover
New Hampshire federal court rules that individual who helped arrange sale of a medical business could not collect a commission from the transaction because he did not hold a New Hampshire real estate license and the transaction involved the acquisition of real estate.
A consulting firm (“Finder”) for entities in the healthcare industry entered into an “finder’s agreement” (“Agreement”) with an entity (“Owner”) that owned a traumatic brain injury facility (“Business”) located in New Hampshire. The Agreement stated that the Owner would pay the Finder a finder’s fee if he found a buyer for the Business.
The Finder located an interested party (“Buyer”) for the Business. The Buyer contacted the Owner directly about its interest in the Business, and eventually purchased the entire Business- the real property, equipment, machinery, and personal property. The Finder had entered into a confidentiality agreement with the Buyer that required the Buyer to pay him a finder’s fee if the Buyer circumvented the Finder and worked with the Owner to directly purchase the Business.
The Finder filed a lawsuit against the Buyer and the Owner in California seeking payment of the finder’s fee outlined in the contracts with both parties. The case was eventually transferred to federal court in New Hampshire, and the Buyer and the Owner argued that New Hampshire’s real estate license law barred payment to the Finder because he did not hold a New Hampshire real estate licenses. The Finder argued that California law applied to this transaction and so he could collect the finder’s fee. The court considered both arguments.
The United States District Court for the District of New Hampshire determined that New Hampshire law applied to this transaction and thus the Finder could not collect a fee. The court considered which state’s law applied to the transaction. Usually, a federal court with parties from varying jurisdictions would apply the choice of law from the state where the court is located, but this lawsuit was originally filed in California and so the California choice of law rules will determine which state’s law applies to the transaction. However, California’s choice of law involving contract interpretation then requires the court to make a further examination: whether to interpret the contract under a California state statute or common-law government interest test.
The court ruled that New Hampshire law applied under either test. The California statute for interpreting contracts requires the court to use the law of the jurisdiction where the contract is to be performed. Looking at a series of factors, the court found that the fact that the Business was located in New Hampshire was the determining factor in evaluating where the contract would be performed. Under the governmental-interest test, the court must examine the law of the other jurisdiction. If that law conflicts with California law, then the court will apply the law of the state with a predominate interest in the transaction. Since the Business was located entirely in New Hampshire, the court ruled that New Hampshire had a predominate interest in the transaction and its law would apply under this test as well.
New Hampshire law barred the Finder from collecting a fee from the transaction. The state requires a real estate license to receive a fee for the conveyance of any interest in real estate and the sale of the Business included real estate. The Finder tried to argue that the transaction only tangentially involved real estate, but New Hampshire case law is clear that a license is required to receive a payment for the brokering of any interest in real estate. Thus, the court ruled that the Finder could not collect a fee and dismissed the lawsuit.
Eskenazi v. Slover, No. 17-CV-610-AJ, 2018 WL 6529180 (D.N.H. Dec. 12, 2018). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information.]