South Austin Market Place, Inc. v. James F. Parker Interests, Inc. and David Petrick

• Court: Court of Appeals of Texas
• Decided: March 9, 2000
• Docket: 03-99-00144-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-99-00144-CV

South Austin Market Place, Inc., Appellant

v.

James F. Parker Interests, Inc. and David Petrick, Appellees

FROM THE COUNTY COURT AT LAW NO. 2 OF TRAVIS COUNTY

NO. 241,543, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING

South Austin Market Place, Inc. ("South Austin"), appellant, leased its property to the Texas Department of Criminal Justice ("TDCJ"). Appellees James F. Parker Interests, Inc. and David Petrick, ⁽¹⁾ who introduced TDCJ to the property, sued South Austin to recover a brokerage commission they claim is due to them under a commission agreement with South Austin. Both parties filed motions for summary judgment. The trial court granted summary judgment in favor of the Brokers, and South Austin perfected this appeal. Because the record does not contain conclusive proof that the Brokers are licensed brokers as required by statute, we will reverse the summary judgment and remand the cause to the trial court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

By letter dated March 6, 1996, Parker and South Austin entered into a commission agreement by which South Austin promised to pay a commission to Parker if he found a tenant for certain commercial property owned by South Austin. The same letter registered TDCJ as a prospective tenant of the property. The commission agreement provides, in pertinent part:

In the event of or upon the consummation of a lease on the above described property with [South Austin] and [TDCJ], [South Austin] hereby agrees to pay to [Parker] . . . for personal services rendered in procuring said Lessee a gross commission equal to ten percent (10%) of the gross rental income for leases of two (2) years or less; and, six percent (6%) of the gross rental income for leases of two (2) years or more. This agreement shall cover any and all expansions and renewals over the original or primary term of said lease, said commission to be paid upon execution of the lease agreement.

If, within 365 days from the date of introduction of property to a prospective lessee or renter, the property is leased or rented to anyone to whom [Parker] has introduced the property, then [South Austin] shall be obligated to pay [Parker] the commission contemplated by this agreement.

Parker knew that TDCJ was in need of immediate, long-term office space. A state agency may enter into an "emergency lease" of two years or less without going through a competitive bid process, but must solicit bids for leases longer than two years. Parker and Petrick were successful in brokering an "emergency lease" between South Austin and TDCJ for a term of fifteen months. Upon execution of that lease, the Brokers sought from South Austin the 10% commission due to them under the agreement. The parties agreed that South Austin could pay the commission over time as it received payments from TDCJ, and eventually the entire commission on the "emergency lease" was paid.

TDCJ soon began the bid process for a long-term lease, and South Austin was ultimately awarded the contract. During the bid process, the Brokers assisted South Austin in determining its bid and convincing TDCJ that the property could be adapted to its needs. The long-term lease with TDCJ was signed on February 12, 1998, and amended on March 13, 1998. After TDCJ awarded the lease to South Austin, the Brokers sought the 6% commission from South Austin as provided in the brokerage agreement. South Austin declined to pay the commission sought and instead offered to pay the Brokers a 3% commission, to be paid in installments as TDCJ began paying rent on the property. The Brokers refused to accept this lesser amount and instead hired an attorney to demand the full 6% commission from South Austin. When South Austin continued to refuse to pay that amount, the Brokers filed this lawsuit.

South Austin moved for summary judgment on the ground that the brokerage agreement requires it to pay a commission only if the property is leased to a tenant "within 365 days from the date of introduction of property to a prospective lessee." Since the lease at issue was signed in February 1998, almost two years after the March 1996 letter registering TDCJ as a prospective lessee, South Austin argues that the plain language of the contract shows that no commission is owed on the second lease.

The Brokers filed their own motion for summary judgment, arguing that the language referenced by South Austin above applies only to tenants other than TDCJ. They claimed that the brokerage agreement "applies to the Second Lease by its terms, based upon the prior conduct of the parties, based upon the circumstances surrounding its execution, and based upon the admissions of [South Austin]." ⁽²⁾ The trial court granted the Brokers' motion for summary judgment and awarded them $74,000 plus interest, costs, and attorney's fees.

South Austin now appeals, arguing that the Brokers were not entitled to judgment because they failed to prove that either Parker or Petrick was a duly licensed broker when they provided the services for which they now seek a commission. Even assuming the validity of the agreement as to both brokers, South Austin urges that the plain language of the agreement does not support entitlement to a commission for the second, long-term lease. South Austin asks us to reverse the grant of summary judgment in the Brokers' favor and to grant its own motion for summary judgment.

DISCUSSION

The standards for reviewing a trial court's grant of a motion for summary judgment are well established: (1) the movant for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. See Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). The function of summary judgment is not to deprive litigants of the right to trial by jury, but to eliminate patently unmeritorious claims and defenses. See Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex. 1972).

South Austin asks us to reverse the grant of summary judgment in the Brokers' favor because they failed to offer proof that they were duly licensed brokers when they provided the services for which they seek to recover a commission. The Real Estate License Act provides that a broker seeking to collect a commission "may not bring or maintain an action for the collection of compensation . . . without alleging and proving that the person performing the brokerage services was a duly licensed real estate broker or salesperson at the time the alleged services were commenced." Tex. Rev. Civ. Stat. Ann. art. 6573a § 20(a) (West Supp. 2000).

The Real Estate License Act requires strict compliance before a broker may recover. See Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 289 (Tex. 1978). Because the record contains no evidence that either Petrick or Parker was a duly licensed real estate broker or salesperson when the Brokers helped South Austin obtain the lease in question from TDCJ, South Austin argues that the summary judgment in favor of the Brokers must be reversed.

The Brokers counter that the undisputed evidence in the record is strong enough to establish through indirect evidence that they are licensed brokers. ⁽³⁾ They point to the fact that South Austin previously paid them a commission under the agreement that is now the subject of this lawsuit. Also, the commission agreement at issue refers to Parker as "Broker," and Parker is referred to throughout the record as a "broker." And because South Austin never challenged the Brokers' credentials when they provided the services for which they now seek a commission, they argue that South Austin accepted that they were, in fact, licensed brokers.

Assuming without deciding that indirect evidence can be used to satisfy the statutory requirement, the evidence in the record is insufficient to prove conclusively that the Brokers are "duly licensed real estate broker[s] or salesperson[s]" as required by section 20(a). At most, the evidence shows only that the parties conducted business as though Parker and Petrick were licensed brokers. It does not constitute conclusive proof that they were in fact licensed brokers. "[T]he burden of pleading and proving licensure is placed upon the party seeking to use the courts to collect compensation." Coastal Plains Dev. Corp., 572 S.W.2d at 289; see also Conrad v. Artha Garza Co., 615 S.W.2d 238, 240 (Tex. Civ. App.--Dallas 1981, no writ). Because they failed to prove conclusively that they were licensed brokers at the relevant time, the Brokers were not entitled to summary judgment on this record.

South Austin further asks this Court to render judgment in its favor based on its own motion for summary judgment. It reads the commission agreement to include a 365-day limit on the time in which the Brokers could earn a commission for the TDCJ lease. Since the lease was undisputedly signed more than 365 days after TDCJ was introduced to the property, South Austin argues that the commission agreement, by its terms, precludes the recovery the Brokers seek. Without deciding whether an ambiguity exists in the contract, we hold that South Austin has not conclusively proven that its interpretation of the agreement is the only reasonable interpretation. Summary judgment is therefore inappropriate, requiring that we remand the cause to the trial court for further consideration.

CONCLUSION

We hold that the trial court erred by granting judgment in favor of the Brokers because they did not prove conclusively that they were duly licensed real estate brokers as required by statute. South Austin likewise did not prove conclusively that it was entitled to judgment on the contract. We therefore reverse the trial court's judgment and remand the cause for further proceedings.

J. Woodfin Jones, Justice

Before Justices Jones, Kidd and Patterson

Reversed and Remanded

Filed: March 9, 2000

Do Not Publish

1. James F. Parker is the owner of James F. Parker Interests, Inc. David Petrick is an employee of James F. Parker. Collectively, we will refer to the two as "the Brokers." When necessary, we will refer to both James F. Parker individually and his business as "Parker," and to David Petrick as "Petrick."

2. Both parties agree that the second, long-term lease cannot be characterized as an "expansion or renewal" of the original lease that would require a commission under the agreement.

3. The Brokers also assert that, because South Austin referred to Parker and Petrick as "Brokers" in its brief to this Court, this short-hand designation amounts to a judicial admission that Parker and Petrick are duly licensed brokers. We find this argument unmeritorious.

, 572 S.W.2d 285, 289 (Tex. 1978). Because the record contains no evidence that either Petrick or Parker was a duly licensed real estate broker or salesperson when the Brokers helped South Austin obtain the lease in question from TDCJ, South Austin argues that the summary judgment in favor of the Brokers must be reversed.

The Brokers counter that the undisputed evidence in the record is strong enough to establish through indirect evidence