Harris v. Scarcelli (In Re Oak Knoll Associates, L.P.)
835 F.3d 24
| 1st Cir. | 2016Background
- Oak Knoll Associates, L.P. (general partners Pamela Gleichman and Rosa Scarcelli) hired broker Robert Harris under a six-month written listing agreement (May 16, 2011) that provided commissions for sales during the term or for offers accepted during the term or within six months after termination; sale commissions were 4.8% and payment was due on closing.
- Harris procured buyer Navarino Capital Management; Oak Knoll and Navarino executed a purchase-and-sale agreement in October 2011, but Navarino later sought price reductions due to restrictive covenants and obtained inspection-period extensions.
- In early 2012 intra-partnership litigation produced an injunction preventing Gleichman from selling the property without Scarcelli’s written consent; Scarcelli’s counsel warned Harris about contempt exposure for violating the injunction.
- Oak Knoll filed Chapter 11 in March 2013; Harris filed a proof of claim and an application to be retained as broker in April 2013 (retention was never finally approved), and a later purchase agreement with Navarino closed in October 2013, but Harris was unpaid.
- Bankruptcy court granted summary judgment for Oak Knoll, concluding Harris was not contractually entitled to a commission and had no equitable claim; district court affirmed. Harris appealed.
Issues
| Issue | Plaintiff's Argument (Harris) | Defendant's Argument (Oak Knoll) | Held |
|---|---|---|---|
| Whether acceptance of an offer during the listing term created an enforceable right to a commission | Acceptance of Navarino’s October 2011 offer triggered the listing clause “should there be acceptance of an offer,” so Harris earned a commission then | The listing must be read as a whole: commissions are conditioned on an actual sale/closing; mere acceptance that does not result in a sale does not trigger payment | Court held the contract unambiguously required a sale/closing for a commission; acceptance alone did not entitle Harris to a commission |
| Whether continued negotiations automatically extended the listing so Harris earned a commission on the later closing | The listing’s automatic-extension clause kept the listing alive through negotiations, so Harris’s work led to the eventual sale and commission | There is no evidence negotiations continued within the relevant period; even under Harris’s interpretation, negotiations ceased and the listing expired before the closing | Court held Harris waived or failed to prove the extension/continuous-negotiation theory; summary judgment for Oak Knoll affirmed |
| Whether equitable relief under bankruptcy law or Connecticut statute could award Harris a commission despite contract failure | Harris invoked 11 U.S.C. § 105(a) and Conn. Gen. Stat. § 20-325a(d) to argue recovery is equitable/authorized | Oak Knoll argued § 105(a) cannot create a claim where none exists and Harris failed to preserve or develop the statutory equitable argument or show substantial compliance | Court held § 105(a) cannot be used to create an identifiable Bankruptcy Code right here; Harris’s statutory equitable claim was waived and insufficiently developed, so no equitable relief |
Key Cases Cited
- Daniels v. Agin, 736 F.3d 70 (1st Cir. 2013) (summary judgment standards apply unchanged in bankruptcy proceedings)
- Soto-Rios v. Banco Popular de P.R., 662 F.3d 112 (1st Cir. 2011) (standard for summary judgment review)
- In re Varrasso, 37 F.3d 760 (1st Cir. 1994) (view evidence in light most favorable to nonmoving party on summary judgment)
- Raleigh v. Illinois Department of Revenue, 530 U.S. 15 (2000) (state law governs substance of bankruptcy claims)
- Revere Real Estate, Inc. v. Cerato, 438 A.2d 1202 (Conn. 1982) (broker’s right to commission depends on terms of employment contract)
- Jamo v. Katahdin, Inc., 283 F.3d 392 (1st Cir. 2002) (limits on bankruptcy court equitable powers under 11 U.S.C. § 105)