64 Mass. App. Ct. 142 | Mass. App. Ct. | 2005
We decide in this appeal whether a licensed real estate broker providing commercial mortgage brokering services
Background. This action arises out of an oral brokerage contract between Meredith & Grew, Inc. (M&G), a national real estate service provider, and Sam Adams,
On cross motions, summary judgment was entered in favor of the defendants on all counts of M&G’s amended complaint. With respect to the breach of contract claim, the motion judge determined that M&G’s real estate broker was not acting in his “professional capacity” within the meaning of G. L. c. 259, § 7, and that, therefore, any agreement for compensation in connection with mortgage brokerage services was void because it was not in writing. M&G filed this appeal.
We agree with M&G that the motion judge’s interpretation of the phrase “licensed real estate broker . . . acting in their professional capacity,” was erroneous. In basing her decision on
Summary of facts. As we have intimated, Adams’s role in the creation of the oral brokerage agreement may, on remand, figure significantly in the eventual resolution of this dispute. Adams apparently wore many hats, and it is far from clear on this record which hat or hats he was wearing when he communicated with M&G’s real estate brokers about the need for financing.
Lincoln Group and the defendants, Plaza Properties and Worcester, are all corporate entities related to one another through the Gould family trust and the Gould marital trust (the Gould trusts). Harriet Gould (Adams’s mother) and Robert Bogan are trustees of the Gould trusts.
The role of these companies is, in part, to hold title to commercial properties for the Gould trusts, with Plaza Properties supplying management services to the others. The commercial property that lies at the center of this dispute is a multi-tenanted shopping mall in the city of Worcester known as Lincoln Plaza. It is this forty-five acre property, for which financing was sought and eventually obtained, that is the subject of the brokerage agreement at issue.
The defendants Plaza Properties and Worcester are managed by Adams.
Over the course of several years prior to 1999, M&G had on numerous occasions been engaged by the family members for the purpose of locating lenders willing to extend credit in connection with one or more of its entities. In July, 1999, Adams engaged M&G to find a lender who would be willing to loan funds in amounts sufficient to refinance existing debt secured by a mortgage on the Lincoln Plaza property, as well as to finance construction in connection with a major expansion of that mall. At the time, title to the Lincoln Plaza property was held by RFP-BCIA-WL Realty Trust (RFP-BCIA). Title had been transferred (along with that of several other Gould trust properties) to RFP-BCIA as part of a complex financing arrangement pursuant to which Lincoln Plaza was leased back to the Gould trusts, through Lincoln Group, with an option to repurchase upon repayment of the financing loan. The new loan that Adams had asked M&G to broker would have provided funds for the repurchase of Lincoln Plaza as well as for the mall expansion. Adams and the defendants knew from their prior dealings with M&G that it typically charged a contingent commission of one percent of the amount loaned.
M&G claims that Adams was acting as the common manager and agent of Lincoln Group and the defendants, Plaza Properties and Worcester, when he entered into an agreement for M&G’s services to find a lender that would loan funds for the Lincoln Plaza project. Thus, even if the original borrower was, as represented by Adams, to have been Lincoln Group, the internal decision made by Adams — to change which entity would be borrower and hold title to the property — would have had no impact on the agreement with M&G. The defendants take the position that M&G’s agreement was with Adams acting solely as agent for Lincoln Group,
It is undisputed that M&G invested its efforts and used its contacts in the real estate industry to find a lender.
A month later, the defendants obtained what Dime referred to as a “bridge loan” to cover the refinancing and reacquisition portion of the project. At that time, Adams was involved in the decision that Worcester would be both the borrower on the loan as well as the entity that would reacquire title to Lincoln Plaza. As set forth in the memorandum of decision, this bridge loan was obtained “[ojwing directly to M&G’s initial efforts to introduce [Lincoln Group] to Dime.”
In the following year, on September 29, 2000, Worcester obtained a second loan from Dime in the amount of $38.5 mil
Prior to initiating this action against the defendants, M&G initiated an action on February 26, 2001, against Lincoln Group, seeking payment of the commission. A default judgment entered against Lincoln Group. When postjudgment discovery revealed that Lincoln Group was no longer functioning and had no assets, M&G initiated the present action.
Discussion.
1. The contract claim. In Superior Court, the defendants argued that G. L. c. 259, § 7, applied to its oral agreement with M&G because M&G, although a licensed real estate broker,
The defendants argue that the motion judge was correct to conclude that the definition of “real estate broker” set forth in another chapter of the General Laws — G. L. c. 112, § 87PP —
Before it was amended by St. 1991, c. 144, § 1, the definítian of real estate broker set forth in c. 112, § 87PP, included mortgage brokering.
We first note that § 87PP itself states that its definitions are “[f]or the purposes of sections eighty-seven PP to eighty-seven DDD” of c. 112. G. L. c. 112, § 87PP, inserted by St. 1957 c. 726, § 2. All of those sections fall under the heading “Registration of Real Estate Brokers and Salesmen.” St. 1957, c. 726, § 2. Thus, the purpose of § 87PP is to define that set of activities that requires licensing as a real estate broker; it does not limit the actions that may be engaged in by a real estate broker. Indeed, it may be inferred from certain provisions in the real estate broker registration statute itself that mortgage brokering remains an activity engaged in by both real estate brokers and real estate salesmen.
Under the very same legislation by which it amended § 87PP, the Legislature created G. L. c. 255E, a new licensing scheme for residential (but not for commercial) mortgage brokers. See St. 1991, c. 144, § 3.
Prior to 1991, neither residential nor commercial mortgage brokering was regulated outside of the requirement that anyone who “negotiates or offers or attempts or agrees to negotiate a loan secured or to be secured by mortgage or other encumbrance upon real estate” must register as a real estate broker. G. L. c. 112, § 87PP, as appearing in St. 1957, c. 726, § 2. The enactment of the 1991 legislation, creating licensing requirements for residential (but not commercial) mortgage brokering, imposed no new restrictions on commercial mortgage brokering activity.
Thus, neither the change in the definition of real estate broker in c. 112, nor the addition of the mortgage brokers licensing statute through enactment of c. 255E, can be seen as imposing any restriction on a real estate broker’s ability to place or find commercial mortgage loans. The question, then, is whether the ordinary and approved usage of the term “real estate broker” also includes mortgage brokering, such that the finding of a commercial mortgage lender can be construed as falling within the definition of “acting in [a real estate broker’s] professional capacity” for purposes of c. 259, § 7.
As we have previously observed, c. 112 contains references to mortgage brokering as an activity undertaken by real estate brokers and salespersons. See note 15, supra. However, because the real estate broker licensing statute and the Statute of Frauds are not in pari materia, we have some doubt about the usefulness of relying solely on c. 112 to ascertain the meaning of c. 259. See Commonwealth v. Smith, 431 Mass. 417, 420 (2000); Cambridge v. Cambridge Police Patrol Officers Assn., 58 Mass.
Based on the foregoing authorities, we conclude that the
Because material facts remain in dispute (including the facts relative to the relationships between the various entities controlled by the Gould trusts; whom Adams was representing in his negotiations with M&G; the degree of similarity between the expansion loan for which M&G solicited lenders and the loan that the defendants allege they obtained independently of M&G’s efforts), the judgment must be vacated as to the plaintiff’s contract claim and the matter must be remanded for further action in the Superior Court.
2. Claim based on quantum meruit. Although the contract between M&G and Adams is not void, other fact issues may now arise that could affect a determination whether M&G’s agreement binds the defendants. If an explicit agreement between M&G and the defendants is found not to exist, the evidence may support M&G’s claim that there is an implied contract between it and the defendants. We will, therefore, vacate the judgment of dismissal as to this claim, and remand for further action in Superior Court.
3. Claim for an account stated. The motion judge correctly entered summary judgment against M&G on its “Action Upon an Account Stated,” since M&G not only failed to allege that the defendants ever assented to the correctness of the debt, but also affirmatively stated that the defendants had consistently refused to acknowledge the debt. See Milliken v. Warwick, 306 Mass. 192, 196-197 (1940) (a claim for an account stated
4. Chapter 93A claim. The motion judge concluded that summary judgment was proper on M&G’s c. 93A claim for the reason that M&G failed to demonstrate sufficient facts to support recovery. Focusing on the plaintiff’s allegations of “the defendants’ refusal to pay the alleged debt, the default on the suit against [Lincoln Group], and [Lincoln Group’s] transfer of its right to acquire Lincoln PÍaza to Worcester,” the judge determined that what was at issue was nothing more than an ordinary dispute over whether money was owed.
In addition to the foregoing allegations, however, the summary judgment record reveals allegations from which it might reasonably be inferred that the defendants had engaged in unfair or deceptive conduct.
Conclusion. So much of the judgment as dismisses count three of the plaintiff’s amended complaint is affirmed. The balance of the judgment is vacated, and the matter is remanded to the Superior Court for further proceedings consistent with this opinion.
So ordered.
Sam Adams, a California resident, is also known as Samuel Gould.
Lincoln Group was a party to an earlier suit filed by the plaintiff. See discussion, infra.
The defendants contest M&G’s assertion that Adams represented Plaza Properties or Worcester in the brokerage agreement.
As set forth in the motion judge’s memorandum of decision, Adams “is a potential beneficiary and/or remainderman of the Trusts.”
Plaza Properties is a Massachusetts limited liability company and Worcester is a Delaware limited liability company; each has a principal place of business in Massachusetts.
The defendants claim as undisputed that the agreement was solely with Lincoln Group. They accomplish this by referencing M&G’s verified complaint and an affidavit filed in the earlier action against Lincoln Group (see discussion, infra), in which (according to the defendants) M&G states that it entered into the express oral contract with Lincoln Group, and not with either of the defendants. The defendants also claim, for the first time on ap
The short answer to these claims is that nothing in these documents requires the inference urged by the defendants that Lincoln Group was the only entity with which M&G had an agreement, to the exclusion of other entities for whom Adams acted as agent.
In her memorandum of decision, the motion judge stated, “M&G invested its efforts and used its contacts in the real estate industry to find a lender for the defendants” (emphasis added). It is clear from the arguments to the motion judge, if less so from the parties’ briefs, that it is a disputed question of fact whether M&G was finding a lender for the defendants (that is, for Lincoln Properties and Worcester).
M&G claims that there was an additional understanding between Dime and the defendants, to the effect that the defendants would eventually apply to Dime for financing of the original expansion project once they met Dime’s conditions. Adams and the defendants assert that they have no knowledge of what Dime understood in this regard, and deny such an understanding existed.
It is undisputed that M&G is a Massachusetts licensed real estate broker, as is its senior vice president, David Douvadjian, with whom Adams primarily dealt in connection with the agreement at issue.
General Laws c. 259, § 7, inserted by St. 1984, c. 321, provides, in pertinent part:
“Any agreement to pay compensation for service as a broker or finder or for service rendered in negotiating a loan. . . shall be void and unenforceable unless such agreement is in writing .... For the purpose of this section, the term ‘negotiating’ shall include identifying prospective parties, providing information concerning prospective parties, [or] procuring an introduction to a party to the transaction .... The provisions of this section shall apply to a contract implied in fact or in law to pay reasonable compensation but shall not apply to a contract to pay compensation for professional services of an attorney-at-law or a licensed real estate broker or real estate salesman acting in their professional capacity.”
General Laws c. 112, § 87PP, as amended by St. 1991, c. 144, § 1, defines “real estate broker” as “any person who for another person and for a fee, commission or other valuable consideration, or with the intention or in the expectation or upon the promise of receiving or collecting a fee, commission or other valuable consideration, does any of the following: — sells, exchanges, purchases, rents or leases, or negotiates, or offers, attempts or agrees to negotiate the sale, exchange, purchase, rental or leasing of any real estate, or lists or offers, attempts or agrees to list any real estate, or buys or offers to buy, sells or offers to sell or otherwise deals in options on real estate, or advertises or holds himself out as engaged in the business of selling, exchanging, purchasing, renting or leasing real estate, or assists or directs in the procuring of prospects or the negotiation or completion of any agreement or transaction which results or is intended to result in the sale, exchange, purchase, leasing or renting of any real estate.”
Statutes 1991, c. 144, § 1, an emergency act, deleted, from the end of the definition of real estate broker, “or negotiates or offers or attempts or agrees to negotiate a loan secured or to be secured by mortgage or other encumbrance upon real estate.”
We disagree with the defendants that we may not consider M&G’s arguments as to the legislative history of § 87PP. See Fidelity Mgmt. & Research Co. v. Ostrander, 40 Mass. App. Ct. 195, 200 (1996). Because the defendants raised the statute as a defense, the motion judge was required to interpret the meaning of the ambiguous phrase. The statutory interpretation issue having been addressed by the motion judge, we may consider arguments on the propriety of her ruling.
References to mortgage brokering as an activity performed by real estate brokers and real estate salesmen were not deleted from any other provisions in the real estate brokers licensing statute. See, e.g., G. L. c. 112, § 87QQ (person without real estate broker license may broker loans for self or for employer acting for self); G. L. c. 112, § 87RR (negotiating of mortgage by salesman must be supervised by licensed real estate broker); G. L. c. 112, § 87AAA (prohibiting brokers from mentioning the board of registration of real estate brokers and salesmen while promoting the mortgage of property).
The preamble to St. 1991, c. 144, states that the purpose of the act was to “immediately provide for the licensing of certain mortgage lenders and brokers.” St. 1991, c. 144. It would seem that the law was changed in response to a series of residential mortgage schemes that had been uncovered and prosecuted. See, e.g., Matter of Concermi, 422 Mass. 326 (1996); Matter of Nickerson, 422 Mass. 333 (1996); United States v. Concermi, 957 F.2d 942 (1st Cir. 1992); United States v. Walsh, 75 F.3d 1 (1st Cir. 1996)
A “mortgage broker” subject to the licensing requirement of c. 255E is specifically described as “any person who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans on residential property for others” (emphasis added). G.L. C.255E, § 1.
This dictionary is prepared by the National Q*NET Consortium in conjunction with the United States Department of Labor. (Q*NET is a trademarked term that stands for Occupational Information Network.) The dictionary sets forth a uniform classification system of job titles and descriptians with which the Department of Labor organizes its occupational statistics.
For example, the record would support the reasonable inference that the defendants deceived M&G about the role in the transaction of Lincoln Group — which never had sufficient assets to pay M&G’s commission —• in order to lull M&G into pursuing Lincoln Group for its commission, while the defendants engaged in conduct to make it seem that they had used their own efforts to obtain the loan from Dime, all the while knowing that the lender had been found by M&G.