Buyer and Seller of Huge Commercial Property Conspire Against Brokers' Entitlement to Commission
It’s a sad fact of life that in the business world, many times the wealthy, powerful individuals and/or corporations try to take advantage of basic, hardworking people and push them out of the way in business transactions to save themselves some money when possible. Such is the case here.
The two victims in this commission entitlement case are real estate brokers who have been involved in the real estate business in Palm Beach County since the early and mid-70’s, initially as salespersons and then subsequently as brokers. One of the principals involved is a very wealthy landowner who owned five sections of land (approximately 4,000 acres) free and clear between the Florida Turnpike and Okeechobee Boulevard. One of these real estate brokers had been working on selling this gentleman’s properties for years. He had an open listing to do so and had brought many offers to the owner on various sections over the years, including the property involved in this case.
This broker spoke with a second broker about the availability of these properties. This second broker felt that a large corporation she dealt with might be interested in some or all of the properties and sent correspondence that introduced the corporation to these properties.
Multiple meetings were held between the corporation and the second broker with the knowledge and permission of the landowner. These meetings took place over a three month period and it soon evolved that the corporation became interested in portions of the property.
During the next month, there were many discussions between this second broker, the large corporation and the landowner, culminating in the corporation issuing a letter to the broker instructing her to make an initial proposal regarding portions this property. As instructed, the broker brought this initial proposal to the landowner from the corporation.
As discussion continued between the broker, the corporation and the landowner, the landowner could determine that the deal was starting to heat up because the corporation had committed itself in writing on it’s stationery making this preliminary offer. At this point, he demanded, as owner, that he carry on the negotiations directly with the corporation and that the brokers take a passive role. The brokers were “frozen out”.
These brokers had an understanding from day one with the landowner that their commission on any transaction to take place would be 10%. There was correspondence, potential contracts on sections of land, including the parcel in question, in which the owner had previously agreed to a 10% commission.
Through the process of continuous negotiation, the landowner ended up selling a portion of this property to the large corporation, and entered into two option contracts that basically stated that the corporation had the obligation to purchase 10% of the remaining available land per year to extend over a seven year period. They could buy all of it or greater than 10% at any time they wanted, but they had to purchase a minimum of 10% per year up until six years and then in the seventh year they had to buy whatever was left.
The landowner even admitted that he owed some money to the brokers and offered the brokers in writing $50,000.00 as a real estate commission, but that is a far cry from what he should have paid. At that point in time, the sales had amounted to $8,000,000.00, which would mean a commission of $800,000.00. That does not even include the future sales as pertains to the two option contracts.
The documents show that the landowner and corporation conspired together by editing out the brokers’ names on the original contract. Also, the landowner requested a written statement from the corporation that they had not dealt with any brokers, and the corporation refused to give it, as evidenced by the correspondence and exhibits. In addition, the corporation sent out a memorandum stating that they would do anything within their power to help the landowner against the brokers. The reason they were cooperating in a conspiracy to avoid a real estate commission in this case is because they wanted to continue to maintain a friendly relationship with the landowner for possible future dealings.
The brokers contacted Attorney Richard D. Schuler to represent them in this case. Mr. Schuler researched this matter and retained knowledgeable experts for assistance. Suit was filed against the landowner and the corporation not only for the real estate commission owed, but also for punitive damages because the landowner knew that he owed a real estate commission to the brokers and so did the corporation. It was known so well, in fact, that the corporation actually put the brokers’ names in the original draft of the contract stating that they had been the procuring cause of the sale.
Mr. Schuler was successful in settling this case without going to trial for an amount in excess of $1.5 million
