106 Wash. App. 558 | Wash. Ct. App. | 2001
A real estate broker and its unlicensed corporate salesperson brought this breach of contract action, seeking compensation for their services. The real estate brokers and salespersons act permits such actions only upon proof that plaintiffs were licensed before offering their services. The corporate salesperson was not licensed. The corporate salesperson substantially complied with the statute, however, because both its employees were licensed, and the purposes of the statute were thus fulfilled. No other asserted ground justified summary judgment, and we therefore reverse and remand.
FACTS
Masters, Inc., was a licensed real estate broker operating a RE/MAX franchise. Masters authorized Williamson, Inc., to act as its agent. Curtis and Betsy Williamson are the sole shareholders and the only officers, directors, and employees of Williamson, Inc.
Calibre Homes, Inc., is a builder of single-family homes in Snohomish County. In 1998, Calibre executed letters of authorization appointing Masters its exclusive sales and listing agent for seven new developments. Pursuant to the letters of authorization, Calibre and Masters executed exclusive sale and listing agreements for each lot in the developments, authorizing Masters to appoint Williamson,
In May 1998, Calibre began construction of new homes in one of the developments, Pacific Pointe. Curtis and Betsy worked as the listing agents to sell the homes under construction. The Pacific Pointe development, which includes seven lots and an existing home, was completed and for sale before this lawsuit was filed. On December 31, 1998, Calibre terminated the services of Masters, Curtis, and Betsy. On January 8,1999, five of the Pacific Pointe lots were listed with another broker. During January and February 1999, Calibre executed purchase and sale agreements for six homes in Pacific Pointe. Curtis and Betsy claim these sales resulted from their listing and marketing efforts.
Masters, Inc., and Williamson filed this action against Calibre to recover commissions due for locating properties, developing business and marketing plans for the seven developments, and performing services which resulted in sales within those developments. They alleged breach of contract, promissory estoppel, and quantum meruit.
Calibre moved for summary judgment, arguing that Masters and Williamson were barred from bringing the action because Williamson is not a licensed real estate broker or salesperson; that Masters shared commissions with unlicensed Williamson in violation of RCW 18.85.330; that Williamson could not execute letters of authorization or listing agreements on Master’s behalf because it was unlicensed; and that recovery based on promissory estoppel and quantum meruit would be illegal. The trial court granted Calibre’s motion on unspecified grounds.
We review a grant of summary judgment de novo, engaging in the same inquiry as the trial court.
Substantial Compliance with the Statute
The real estate brokers and salespersons act (brokers act)
The statute permits a corporation to become a licensed real estate salesperson. For purposes of chapter 18.85 RCW, the word “person” includes a corporation.
Any person desiring to be a . . . real estate salesperson, must pass an examination as provided in this chapter. Such person shall make application for an examination and for a license on a form prescribed by the director. Concurrently, the applicant shall:
(1) Pay an examination fee as prescribed by the director by rule.
(2) If the applicant is a corporation, furnish a certified copy of its articles of incorporation, and a list of its officers and directors and their addresses. . . .
(3) Furnish such other proof as the director may require concerning the honesty, truthfulness, and good reputation, as well as the identity, which may include fingerprints, of any applicants for a license, or of the officers of a corporation.[10 ]
Regulations require that the application be submitted “on a form approved by the director and the real estate salesperson and associate broker application shall be signed by the broker or designated broker to whom the license will be
Masters and Williamson contend that the substantial compliance doctrine should apply to the brokers act. Calibre argues the doctrine is limited to the contractors’ registration act.
The contractors’ registration act encourages compliance by requiring a contractor to be registered in order to maintain an action for breach of contract or for compensation.
The Supreme Court first applied the substantial compliance doctrine to the contractors’ registration act
We see no reason the same inquiry should not be undertaken with respect to the requirements of the brokers act. We have described its purpose:
the primary purpose underlying the [A]ct [is] to promote a minimum standard of conduct for those engaged in the business of real estate who are often conducting their business in the capacity of a fiduciary. In short, the purpose of the Broker’s Act is to protect the general public from negligent, unscrupulous, or dishonest real estate operators.[23 ]
Both requirements are satisfied here. Curtis and Betsy performed the services in question. Both have taken and passed the examination and have met ongoing educational requirements. The public and Calibre
As to the application requirement for corporate salespersons, obviously a corporation cannot sit for an examination. Submission of the articles of incorporation and list of officers ensures the legitimacy of the corporate entity. Here, there is no question the corporate entity is legal and its officers and employees are themselves duly licensed. Had Curtis and Betsy filed a corporate application and submitted the articles and the list of officers, the corporation would have been licensed because there is no other requirement. Like the contractor in Murphy, the only requirement not met was the filing of a document proving compliance — in Murphy’s case, proof of insurance; in Williamson’s, proof of corporate status.
Calibre makes much of the fact that no corporate application was ever filed. In some, perhaps most, circumstances, such an omission would indeed be fatal. Here, however, Curtis and Betsy inadvertently omitted a step which would have added nothing to the protections contemplated by the statute, because a parallel licensing procedure containing all the substantive requirements was fully complied with.
It has been held that the legislative purpose of the contractor registration act is achieved when the person bringing the action for compensation is associated with another person who is duly registered under the act, and who is obligated on the project sufficiently to provide the protection of his registration and bond. Since a well driller must meet standards for licensing which exempt him from registration, plaintiff achieved the purpose of the water well contractor’s licensing statute by associating with ... a licensed well driller. Courts have not insisted on literal compliance with a contractor registration law where the party seeking to escape his obligation has received the full protection which the statute contemplates[27 ]
Like the well driller, Curtis and Betsy possessed the licenses that protect the public. Like the unlicensed water well contractor, Williamson, Inc., achieved the purposes of the statute by operating entirely through Curtis and Betsy. Calibre does not explain how the absence of a corporate license for Williamson, Inc., left Calibre or the public at large unprotected.
Calibre also contends, however, that this court implicitly rejected the doctrine of substantial compliance in connection with the brokers act in Kennedy v. Rode.
The facts here are not similar. The unlicensed person in Kennedy was a natural person, not a legal fiction, and was wholly ineligible to receive a share of the commission in exchange for referral of a real estate client. Nothing in Kennedy implicitly amounted to a rejection of the substantial compliance doctrine.
Calibre also argues that the reasons for applying the substantial compliance doctrine to the contractors’ act do not apply to the brokers act. Calibre relies on Expert Drywall, Inc. v. Brain,
Finally, Calibre argues that if the listing agreements are enforced, Calibre will be forced to “participate with Williamson, Inc., in offering real estate to the public through an unlicensed person, a continuing violation of the law.”
Inconsistency Between Letter of Authorization and Listing Agreement
An inconsistency exists between the letter of authorization and the listing agreement for the Pacific Pointe development. In the letter of authorization, Calibre authorized Masters to execute a listing agreement on behalf of Calibre, providing for a six percent commission for the first $100,000 of the sale price and three percent thereafter. The exclusive sale and listing agreement, executed pursuant to the letter of authorization, provided for a flat six percent commission. Calibre argues this inconsistency invalidates the listing agreement in its entirety.
We do not agree. First, Calibre’s reliance on principles of apparent authority is misplaced, since no third parties were involved.
CONCLUSION
Reversed and remanded.
Coleman and Cox, JJ., concur.
Review granted at 145 Wn.2d 1015 (2002).
Appellant Williamson, Inc., is referred to as ‘Williamson.” Curtis and Betsy Williamson are referred to by their first names. Curtis and Betsy are not parties to this appeal.
Calibre counterclaimed for breach of contractual and fiduciary duties, and brought the same claims against Curtis and Betsy, who in turn counterclaimed against Calibre, incorporating by reference the factual allegations in the original complaint. By agreement of the parties, all counterclaims and third party claims were dismissed without prejudice.
Trimble v. Wash. State Univ., 140 Wn.2d 88, 92, 993 P.2d 259 (2000).
CR 56(c); Trimble, 140 Wn.2d at 93.
Chapter 18.85 RCW.
RCW 18.85.010(4).
RCW 18.85.010(2) (emphasis added). The acts specified in subsection (1) include: “Sells or offers for sale, lists or offers to list, buys or offers to buy real estate or business opportunities, or any interest therein, for others.” RCW 18.85.010(1)(a).
Geschwind v. Flanagan, 121 Wn.2d 833, 841, 854 P.2d 1061 (1993).
In contrast, individuals wishing to obtain a salesperson license must satisfy the following requirements:
(1) The minimum requirements for an individual to receive a salesperson’s license are that the individual:
(a) Is eighteen years of age or older;
(b) Except as provided in ROW 18.85.097, has furnished proof, as the director may require, that the applicant has successfully completed a sixty clock-hour course, approved by the director, in real estate fundamentals. The applicant must pass a course examination approved by the director. This course must be completed within five years prior to applying for the salesperson’s license examination; and
(c) Has passed a salesperson’s license examination.
RCW 18.85.095.
RCW 18.85.120 (emphasis added). Calibre has cited no requirement for “such other proof,” and we are aware of none.
WAC 308-124A-120.
For a corporation to obtain a broker’s license, a corporate officer must be designated as the broker and qualify for a broker’s license. WAC 308-124A-200. We note that the “Application for Real Estate Salesperson/Associate Broker/ Branch Manager,” available at the Department of Licensing web site, does not appear to contemplate a corporate applicant, while the broker application has a specific application for corporations. Compare application at<www.wa.gov/dol/bpd/resales.htm> with application at<www.wa.gov/dol/bpd/rebroker.htm>.
RCW 18.27.080.
RCW 18.27.080. See Expert Drywall, Inc. v. Brain, 17 Wn. App. 529, 536, 564 P.2d 803 (1977).
RCW 18.27.040, .050.
Expert Drywall, 17 Wn. App. at 536.
Expert Drywall, 17 Wn. App. at 537.
The legislature amended the contractors’ registration act in 1988 to codify the substantial compliance doctrine. See RCW 18.27.080; Laws of 1988, ch. 285, § 2. In 1997, the legislature added a new section providing: “This chapter shall be strictly enforced. Therefore, the doctrine of substantial compliance shall not be used by the department in the application and construction of this chapter.” Laws of 1997, ch.
79 Wn.2d 417, 486 P.2d 1080 (1971).
Murphy, 79 Wn.2d at 421.
Murphy, 79 Wn.2d at 421; B.A. Van de Grift, Inc. v. Skagit County, 59 Wn. App. 545, 550, 800 P.2d 375 (1990) (substantial compliance argument fails in the absence of public liability insurance).
Murphy, 79 Wn.2d at 422.
Nuttall v. Dowell, 31 Wn. App. 98, 108, 639 P.2d 832 (1982); see also Laws op 1941, ch. 252.
Springer v. Rosauer, 31 Wn. App. 418, 421, 641 P.2d 1216 (1982).
We reject the argument that Calibre, a “sophisticated builder,” is not a member of the public protected by the statute.
25 Wn. App. 741, 610 P.2d 931 (1980).
Spry, 25 Wn. App. at 745-46 (citation and footnote omitted).
41 Wn. App. 177, 181, 702 P.2d 1240 (1985).
Kennedy, 41 Wn. App. at 182.
See Kucera v. Dep’t of Transp., 140 Wn.2d 200, 220, 995 P.2d 63 (2000) (courts do not rely on cases that fail to specifically address and decide an issue).
17 Wn. App. 529, 564 P.2d 803 (1977).
Expert Drywall, 17 Wn. App. at 538-39.
Gen. Ins. Co. v. Superior Court, 26 Cal. App. 3d 176, 183-84, 102 Cal. Rptr. 541, 546-47 (1972). The case was expressly disapproved in Asdourian v. Araj, 38 Cal. 3d 276, 287, 696 P.2d 95, 211 Cal. Rptr. 703 (1985). We note that the California legislature has since amended the contractors’ licensing statute several times to prohibit application of the substantial compliance doctrine except where the contractor proves that it was licensed before performing work, acted reasonably in trying to maintain a license, and did not know or reasonably should not have known that
See, e.g., Dep’t of Ecology v. Adsit, 103 Wn.2d 698, 694 P.2d 1065 (1985) (rancher who used the wrong form substantially complied with requirements of the water rights act). California has applied the substantial compliance doctrine to facts very similar to those in this case. See Schantz v. Ellsworth, 19 Cal. App. 3d 289, 96 Cal. Rptr. 783 (1971) (licensed broker doing business under fictitious name but not licensed under fictitious name had substantially complied with licensing statute; suit held not barred).
Br. of Resp’t at 35.
In April 1999, Masters ceased operating as a brokerage, and Curtis and Betsy moved their licenses to other brokers. Calibre argues that Masters and Williamson are precluded from recovering commissions under the listing agreements because Masters’ broker’s license expired after Calibre terminated the relationship. But the statute requires only that the broker be licensed before performing services or procuring a promise for payment. See RCW 18.85.100.
Because we conclude Masters and Williamson substantially complied with the statute, we do not reach Calibre’s arguments based on RCW 18.85.260 or .330 or Masters’ and Williamson’s quantum meruit claim.
Andrews Fixture Co. v. Olin, 2 Wn. App. 744, 749-50, 472 P.2d 420 (1970) (holder of specialty contractor license substantially complied with requirement for general contractor).
Calibre relies only upon Costco Wholesale Corp. v. World Wide Licensing Corp., 78 Wn. App. 637, 898 P.2d 347 (1995), which involved whether an agent had actual or apparent authority to bind the principal where the agent executed a modification to an agreement.
McCormick v. Lake Wash. Sch. Dist., 99 Wn. App. 107, 114, 992 P.2d 511 (1999) (agent’s unilateral action does not bind the principal).