Mutual Development Corp. v. Ward Fisher & Co.
47 A.3d 319
| R.I. | 2012Background
- Mutual Development Corporation sues Ward Fisher & Company, LLP and WF Realty & Investment, LLC for a real estate commission/fee allegedly earned from the sale of property.
- There was no written agreement obligating payment of any finder’s fee or commission.
- In 2002, Stephen Soscia introduced Ward Fisher to the 250 Centerville Road property; Ward Fisher pursued the property and later WF Realty purchased it.
- Soscia indicated an expectation of a finder’s fee during discussions, but the exact terms are disputed.
- The trial court granted summary judgment for defendants, holding that oral finder’s fees are barred by the Statute of Frauds § 9-1-4(6); plaintiff cross-moved for summary judgment on other counts.
- The Rhode Island Supreme Court affirmed, holding that § 9-1-4(6) applies to finder’s fees and that the term “commission” encompasses both flat-sum and percentage-based payments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 9-1-4(6) apply to finder’s fees? | Finder’s fee falls outside the writing requirement. | Under § 9-1-4(6), any commission on sale of real estate requires writing. | Yes; § 9-1-4(6) applies to finder’s fees. |
| Is there a finder/broker distinction for the Statute of Frauds analysis? | There is a recognized finder/broker distinction; finders are not subject to the writing requirement. | The transaction’s nature controls; the writing requirement applies to any real estate commission regardless of label. | No finder/broker distinction; the writing requirement governs any real estate commission. |
| What is the meaning of 'commission' in § 9-1-4(6)? | Commission refers only to percentage-based payments. | Commission includes both flat-sum and percentage-based payments. | Commission encompasses both flat-sum and percentage-based payments. |
| Should public policy influence the interpretation of § 9-1-4(6)? | Strict application would undermine finder arrangements. | Public protection against unfounded claims supports strict writing requirements. | Public policy supports strict writing requirements; the statute applies. |
Key Cases Cited
- Fishbein v. Zexter, 107 R.I. 672 (R.I. 1970) (discusses finder vs broker and the applicability of the Statute of Frauds)
- Brochu v. Santis, 939 A.2d 449 (R.I. 2008) (finder vs broker and Statute of Frauds applicability; caution against broad labeling)
- Bottomley v. Coffin, 121 R.I. 399 (1979) (distinguishes finder from broker; focuses on transaction nature for Statute of Frauds)
- Buckingham v. Stille, 379 N.W.2d 30 (Iowa Ct. App. 1985) (reiterates that real estate transactions require protection against unfounded claims)
- Shinberg v. Bruk, 875 F.2d 978 (1st Cir. 1989) (recognizes transaction-nature approach to Statute of Frauds)
- Peacock Realty Co. v. E. Thomas Crandall Farm, Inc., 108 R.I. 593 (1971) (cites historical development of fraud-avoidance purpose in real estate deals)