McDade + Co. v. Friendswood Development Co.

911 S.W.2d 541, 1995 Tex. App. LEXIS 3108, 1995 WL 722991
CourtCourt of Appeals of Texas
DecidedDecember 7, 1995
DocketNo. 09-94-069 CV
StatusPublished
Cited by1 cases

This text of 911 S.W.2d 541 (McDade + Co. v. Friendswood Development Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McDade + Co. v. Friendswood Development Co., 911 S.W.2d 541, 1995 Tex. App. LEXIS 3108, 1995 WL 722991 (Tex. Ct. App. 1995).

Opinion

OPINION

BURGESS, Justice.

This is a summary judgment case involving the interpretation of a real estate brokerage agreement. McDade + Company (McDade) entered into a brokerage agreement with American Bureau of Shipping (ABS) in connection with ABS’ search for office space in Houston, Texas. The brokerage agreement named McDade as ABS’ exclusive broker but contained an exception as to Friendswood Development Company (Friendswood). ABS then leased office space from Friendswood. McDade sued both ABS and Friendswood under various causes of action asserting the exception in the McDade-ABS agreement did not cover the ABS-Friendswood transaction. The trial court granted both ABS’ and Friendswood’s motion for summary judgment.

STANDARD OF REVIEW

The standards for reviewing the granting of a motion for summary judgment are well established. The movant for summary judgment has the burden of showing there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., Inc., 690 S.W.2d 546, 548 (Tex.1985). Evidence that favors the non-movant will be taken as true in determining whether a material fact issue exists. Id. at 548-549. Every reasonable inference will be indulged in favor of the non-movant and any doubts resolved in its favor. Id. at 549.

Establishing that no material fact issue exists may be accomplished by summary judgment evidence which conclusively shows that the plaintiff cannot prove at least one element of each cause of action. See Sakowitz, Inc. v. Steck, 669 S.W.2d 105, 107 (Tex.1984).1 If a defendant moves for summary judgment on the basis of an affirmative defense, he must conclusively prove all essential elements of that defense. McKellar v. Marsac, 778 S.W.2d 573, 576 (Tex.App.—Houston [1st Dist.] 1989, no writ) citing [544]*544Smiley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972).

POINT OF ERROR ONE-APPELLEE ABS

McDade in its first point of error argues the trial court improperly granted summary judgment to ABS. In its motion, ABS raised an affirmative defense which is dispositive of this point.

ABS contends McDade’s failure to comply with the requirements of the Real Estate License Act section 20(b) (RELA) precludes the cause of action. McDade replies these requirements apply only to recovery-of-commission suits, which this ease is not. RELA provides in pertinent part:

An action may not be brought in a court in this state for the recovery of a commission for the sale or purchase of real estate unless the promise or agreement on which the action is brought, or some memorandum thereof, is in writing and signed by the party to be charged or signed by a person lawfully authorized by him to sign it.

Tex.Rev.Civ.Stat.Ann. art. 6573a § 20(b) (Vernon Supp.1995). McDade does not allege they have a writing that satisfies these requirements.2 Rather, it alleges its suit is for breach of an agency agreement and not for recovery of a commission — therefore the suit is not within the parameters of RELA.

In Henry S. Miller Co. v. Treo Enterprises, 585 S.W.2d 674 (Tex.1979), our Supreme Court addressed the distinction between suing for breach of contract and for a commission. The court found the promissory note being sued upon represented a commission and therefore the requirements of RELA § 20 applied.

For the purposes of determining the applicability of the Real Estate License Act ... the substance of the contract is the controlling question, not the form which the transaction ultimately takes, [citation omitted] To hold otherwise would encourage ... entities to develop ingenious devices or other indirections to evade the salutary purposes of the Act.

Id. at 676-677.

Several Courts of Appeals have addressed this issue. In Cook v. City of Plano, 656 S.W.2d 607, 608 (Tex.App.—Dallas 1983, writ refd n.r.e.), the court recognized:

[W]hen a broker has contracted for an exclusive agency and the principal wrongfully breaches the contract, the broker is entitled to recover damages ... [and] in such instances, the broker’s cause of action is not to recover the commission promised to him but to recover damages for the principal’s breach, [citation omitted] The measure of damages to which the broker is entitled ... is the amount of his probable earnings under the contract, or in other words, his commission.

But the court went on to state: “[i]t would be ironic if a broker could recover his commission after breach of a contract which would not support recovery of a commission from his principal had it been performed.” Id. The court then found that where a contract in writing has not been executed by the party charged, Texas courts have consistently denied recovery.

The First District Court of Appeals of Houston followed Cook in McKellar v. Marsac, 778 S.W.2d at 573. As noted by the court, “[a] salutary purpose of the Real Estate License Act is to protect sellers and buyers of real estate from real estate broker commission claims, unless those claims are supported by written agreements.” Id. at 576. The court quoted heavily from Cook and held that characterizing the sale of real estate as a joint venture and labelling a commission as a profit share made it no less a real estate sale for a commission. Id. at 576. Since neither party contended a written agreement existed, the finding that the action was in fact a recovery-for-commission suit was dispositive and the broker was denied recovery. Id.

LA & N Interests, Inc. v. Fish, 864 S.W.2d 745 (Tex.App.—Houston [14th Dist.] 1993, no [545]*545•writ), also followed Cook. The facts of Fish are identical to those of the ease at hand. LA & N Interests contracted with Fish to be their exclusive agent in locating real estate. The agreement provided LA & N would look to the seller for their fee. Fish then purchased property with the assistance of another company and LA & N sued. The court found that no terms of the agreement charged Fish with an obligation to pay and therefore “the Agreement [did] not satisfy the RELA writing requirement.” Id. at 750. The court went on to state:

While we believe that fact issues exist pertaining to whether Fish breached his exclusive agency agreement with [LA & N], Texas law is clear that a plaintiff cannot evade the RELA writing requirement by characterizing a claim for a real estate commission in breach of contract terms. Id.

According to the agreement between ABS and MeDade, McDade was to perform various brokerage services for ABS, including investigating and securing a satisfactory location, using other brokers as necessary, and negotiating a lease for purchase.

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Related

Friendswood Development Co. v. McDade + Co.
926 S.W.2d 280 (Texas Supreme Court, 1996)

Cite This Page — Counsel Stack

Bluebook (online)
911 S.W.2d 541, 1995 Tex. App. LEXIS 3108, 1995 WL 722991, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcdade-co-v-friendswood-development-co-texapp-1995.