Durham Management, Inc. v. Bank One, Louisiana, National Ass'n

906 So. 2d 489, 2003 La.App. 1 Cir. 2479, 2005 La. App. LEXIS 238, 2005 WL 327701
CourtLouisiana Court of Appeal
DecidedFebruary 11, 2005
DocketNo. 2003 CA 2479
StatusPublished

This text of 906 So. 2d 489 (Durham Management, Inc. v. Bank One, Louisiana, National Ass'n) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Durham Management, Inc. v. Bank One, Louisiana, National Ass'n, 906 So. 2d 489, 2003 La.App. 1 Cir. 2479, 2005 La. App. LEXIS 238, 2005 WL 327701 (La. Ct. App. 2005).

Opinion

1 ?PETTIGREW, J.

This matter arises out of the effect and interpretation to be afforded a management agreement between the plaintiff, a real estate firm, and defendant, the subsequent transferee of a commercial building. Defendant now appeals from a trial court judgment in favor of plaintiff.

FACTS

Robert L. “Bob” Durham (“Mr.Durham”) is the sole shareholder of Durham Real Estate, Inc., substitute plaintiff herein. Mr. Durham, through his employment with C.J. Brown Realty, created and headed that firm’s commercial property management and sales division for nearly twenty-five years prior to his departure in 1986. Through the influence of his then-employer, Heidel Brown1, Mr. Durham developed a long-standing business relationship with City National Bank (“City National”). Mr. Durham testified that his personal friendships with several bank officers and board members allowed him to represent City National in its various real estate transactions, including commercial leasing and property management as well as real estate sales. As their business relationship was built upon a long-standing friendship and “absolute trust”, Mr. Durham stated that he never felt the need to reduce his relationship with City National to-writing.

Initially, Mr. Durham’s work on behalf of City National consisted almost exclusively of real estate appraisals with some real estate sales. Following the completion in the early 1980s of City National’s new headquarters known as the City Plaza building situated at 445 North Boulevard in Baton Rouge, Mr. Durham became more involved in property management and commercial leasing. Mr. Durham testified that his customary fee for these services was 6 percent. • In 1984, shortly after City National relocated to space within the City Plaza building, Mr. Durham, through his employment with C.J. Brown Realty, sold the bank’s former offices that were also located on North Boulevard for $1,100,000.00. Despite the absence of a written agreement regarding a fee, Mr. Durham ^testified that he received 80 percent of the 6 percent fee paid to his employer, C.J. Brown Realty. When Heidel Brown decided to sell his company, Mr. Durham purchased the property management accounts of C.J. Brown Realty and formed his own corporation, Durham Management, Inc. (“Durham Management”).

City National was acquired in 1987 by First Commerce Corporation (“First Commerce”), and Robert Sossaman, property manager for First Commerce, purportedly wanted to formalize his relationship with Mr. Durham and place it into writing. Accordingly, Mr. Durham’s firm, Durham Management, provided a management agreement, produced by the Institute of Real Estate Management of the National Association of Realtors, that Durham Management, and City National2 executed on [492]*492June 3, 1987, and covered the exclusive rental, lease, operation, and management of the City Plaza building situated at 445 North Boulevard in Baton Rouge, Louisiana, for the succeeding twelve months.

Pursuant to terms typed into the agreement, Durham Management was to receive $1,500.00 per month as a management fee in addition to a 6 percent commission on gross rents collected from the lease of office space within the building. The ' agreement did not authorize Mr. Durham to list anything for sale or to sell anything. Language typed into the agreement at Paragraph 4(d)(5) reserved to the owner [defined therein as City National] the right to sell its building. Further language provided that “Agent [defined therein as Durham Management] will be protected on any sale involving another broker.”3 Later, a one-year renewal contract, identical to the original management agreement, was signed on July 13, 1988, by Mr. Durham and the new bank president of City National, E. Graham Thompson. Subsequently, Mr. Durham and Mr. Thompson executed a second renewal of their one-year management contract on April 16, 1990. This agreement was identical to the previous two agreements. All three agreements provided for automatic Lrenewals for annual periods at the conclusion of the one-year term specified.- The agreements could be cancelled by either party upon thirty days written notice after the expiration of the specified term.

The agreements further provided that the contract would be binding upon the successors ‘ and assigns of Durham Management and the heirs, administrators, executors, successors, and assigns of City National. The current plaintiff, Durham Real Estate, Inc.,4 is the successor and assignee of Durham Management by virtue of a previous assignment. Defendant, Bank One, is City National’s successor and assignee as it relates to the agreement.

Mr. Durham testified that during the first quarter of 1998, rumors were rampant that Bank One was interested in purchasing First Commerce/City National and purportedly there were constant discussions by bank officials about the probability that the City Plaza building would be sold. Mr. Durham further testified that although the building was not for sale at that time, bank officers encouraged him to locate a prospective buyer. Relying on the authority of his 1990 management agreement, Mr. Durham stated that he seized the initiative and undertook extensive efforts to sell the City Plaza building for the bank. Mr. Durham claimed that as part of this effort, he telephoned specific individuals in the Baton Rouge area whom he thought might be interested in purchasing the building, and if said individuals requested additional information, he provided them with confidential information regarding operating expenses and rent rolls. During the first half of 1998, Mr. Durham claimed to have contacted, provided information to, and showed the building to Mike Wampold, who ultimately purchased the building.

On June 12, 1998, First Commerce/City National officially merged with Bank One. Bank One later sold the City Plaza build[493]*493ing in the early months of 1999 to a company Downed by Mr. Wampold for $16 million dollars. Trammel Crowe5 and Latter & Blum Realty assisted in this sale and split a negotiated real estate commission of 1 percent. Bank One did not pay a real estate commission to Durham Management, and Durham Management instituted this suit on May 31, 2000.

ACTION OF THE TRIAL COURT

On February 14, 2001, Bank One filed a peremptory exception raising the objection of no right of action, or in the alternative, a motion for summary judgment. The basis of Bank One’s objection was that Durham Management was prohibited from contracting for a real estate commission due to its failure to hold a valid real estate license at either the time the agreement was contracted or the time of the subsequent sale. Durham Management sought leave of court on April 20, 2001, to substitute Durham Real Estate as the proper party plaintiff in this matter. For reasons orally assigned, the trial court denied Bank One’s exception as to no right of action and alternative motion for summary judgment. Bank One’s subsequent applications for supervisory writs were similarly denied.6

A trial on the merits took place on September 9 and 10, 2002. Post-trial briefs were subsequently filed and the trial court heard oral argument from counsel on November 25, 2002.

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Bluebook (online)
906 So. 2d 489, 2003 La.App. 1 Cir. 2479, 2005 La. App. LEXIS 238, 2005 WL 327701, Counsel Stack Legal Research, https://law.counselstack.com/opinion/durham-management-inc-v-bank-one-louisiana-national-assn-lactapp-2005.