Weber, Hodges & Godwin Commercial Real Estate Serv. v. Cook: Brokerage Collects Commission from Expired Listing

A North Carolina appellate court has considered whether a brokerage could collect a commission from a transaction involving a buyer who discussed purchasing the property with the sellers during the listing period and who then purchased the property after the expiration of the listing agreement but during the period covered by the listing agreement’s protection period clause.

John D. and Rose D. Cook (“Sellers”) entered into a one-year exclusive right to sell contract for a commercial property they owned with Weber, Hodges & Godwin Commercial Real Estate Services, LLC (“Brokerage”). Following the expiration of the listing agreement, the parties renewed the agreement, with the new agreement expiring in May 2005. In January or February 2005, Ashok Patel (“Developer”) contacted one of the Sellers about the property, as he was looking to buy land on which to build a hotel. The Sellers never informed the Brokerage about this conversation, and eventually the property was sold to the Developer in August 2005, 93 days after the expiration of the listing agreement. The Sellers refused to pay the Brokerage a commission from the sale.

The Brokerage brought a lawsuit against the Sellers, seeking payment of their commission from the sale to the Developer. The trial court awarded the Brokerage $178,550 in damages, and the Sellers appealed.

The North Carolina Court of Appeals affirmed the trial court’s verdict. The court first considered whether the trial court should have set aside the verdict in favor of the Brokerage because the verdict was not supported by the evidence. The court looked at the listing agreement. In relevant part, the listing agreement stated that: “[t]hat the Property may be shown only by appointment made by or through Listing Agency. Seller shall refer to Listing Agency all inquiries or offers it may receive regarding this Property…[and] immediately refer to Listing Agency all inquiries by anyone interested in the Property. All negotiations shall be conducted through Listing Agency.” The listing agreement’s protection clause also stated that the Brokerage would receive a commission if the property were sold within 120 days after the expiration of the listing agreement to a buyer with whom the Brokerage had communicated during the listing period.

The court found that the Brokerage had submitted sufficient evidence to support that a sale had occurred within the listing period, that the Sellers had breached the listing agreement, and the Brokerage’s resulting damage claims. Based on this evidence, there was sufficient evidence to support the jury’s award to the Brokerage and so the court affirmed the award.

Next, the court considered whether the listing agreement limited the Brokerage’s ability to recover only actual damages, thereby requiring the court to order a new trial because the jury had awarded the Brokerage additional damages. The Sellers did not cite any portion of the listing agreement or any other author in support of this argument. Since the court’s rules of procedure require a citation of authority in support of its arguments, the court dismissed this argument for lack of support. Thus, the court affirmed the trial court’s verdict in favor of the Brokerage.

Weber, Hodges & Godwin Commercial Real Estate Serv. v. Cook, 186 N.C.App. 288 (N.C. Ct. App., 2007).

Editor’s Note: NAR contributed financial support to the Brokerage, per the recommendation of NAR's Legal Action Committee.

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