Carolina Business Brokers v. Strickland

Citations: 384 S.E.2d 72; 299 S.C. 237; 1989 S.C. App. LEXIS 116Docket: 1348

Court: Court of Appeals of South Carolina; June 5, 1989; South Carolina; State Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Carolina Business Brokers, operating as Sunbelt, initiated a lawsuit against George C. Strickland for a broker's commission stemming from a listing agreement. The master awarded Sunbelt a $40,000 commission and attorney's fees, which Strickland appealed. The court acknowledged that findings of fact must be viewed favorably towards Sunbelt and will only be overturned if unsupported by evidence.

Strickland, who owned an insurance agency, signed a listing agreement with Sunbelt on May 8, 1985, set to expire on November 11, 1985. On November 2, 1985, Sunbelt agent Edward Pendarvis discussed the agency with potential buyer Robert Bring, who signed a Confidentiality Agreement. Strickland subsequently extended the listing agreement until January 1, 1986.

Negotiations progressed, and Bring's offer to purchase the agency for $650,000, mirroring the listing price, was signed by Strickland on January 3, 1986. The offer included four contingencies that required further agreements between the parties, particularly focusing on a managerial contract essential for Bringing's success as a newcomer in the insurance industry.

A meeting to finalize the management contract and review the year-end financials was scheduled for January 28, 1986, but was canceled due to the accountant's illness. Despite this, Strickland and Bring met socially that day, where they discussed the management contract and Strickland's salary expectations. Strickland expressed his reluctance to sell the business, stating he did not genuinely wish to proceed with the sale.

Bring expressed concerns about reaching a final agreement and requested the return of his deposit, which DeSantis subsequently returned. Strickland and Pendarvis discussed the matter, but Pendarvis did not engage in further negotiations. Sunbelt filed a lawsuit against Strickland for breach of contract, quantum meruit, and unfair trade practices. The court directed a verdict for Strickland regarding unfair trade practices but ruled in favor of Sunbelt on the breach of contract claim, leaving the quantum meruit claim unaddressed. The court is now evaluating whether Sunbelt was entitled to a commission due to Strickland's breach.

The master's ruling referenced South Carolina case law, asserting that a broker earns a commission when a seller accepts a buyer and a sales contract is formed. However, cases like Bishop Realty and Thomas-McCain highlight that commissions may be considered earned based on contractual language, irrespective of sale consummation. A critical issue is whether Sunbelt earned its commission before closing or if it was contingent upon the sale's closing and payment. 

DeSantis testified that commissions are earned only if a deal closes, and non-payment occurs only if the seller defaults on the listing agreement. The written listing agreement with Sunbelt expired on November 8, 1985, but was extended until January 1, 1986. Although Bring signed an offer on December 31, 1985, Strickland did not accept it until January 3, 1986, raising doubts about the agreement's validity. Despite this, the master erred in concluding Strickland was in default under the listing agreement, which stipulates that the seller owes a commission if the listing is canceled or if the seller fails to comply, preventing the property's sale within the listing term.

Strickland's communication to Bring regarding not wanting to sell his business, along with his failure to provide year-end financials, was deemed by the master as a withdrawal from the sale and noncompliance with the Listing Agreement. However, it was determined that no evidence supports this conclusion. Testimonies from both parties indicated that no binding contract existed due to unresolved contingencies critical to the deal, confirmed by additional witnesses Pendarvis and DeSantis. Strickland did not express a definitive unwillingness to sell; rather, he responded to inquiries about his desire to sell. Bring himself indicated he sought the return of his deposit because he felt a deal could not be finalized, but he did not assert that Strickland's hesitance made the contract impossible to consummate. Sunbelt's claim that Strickland unilaterally terminated the deal was based solely on assumptions. Ultimately, there was no evidence that Strickland unilaterally withdrew his property from sale or violated the agreement. The parties failed to achieve a mutual agreement on key contingencies, particularly the management contract, leading to the deal's collapse. The absence of provided financial statements was deemed irrelevant. The findings of the master were reversed, with concurrence from Chief Justice Sanders and Acting Judge Littlejohn. It was noted that Sunbelt acknowledged the listing was never canceled, and Strickland maintained that negotiations were ongoing post-discussion at a golf outing. Additionally, Strickland later requested that Pendarvis facilitate the presentation of the management contract to Bring.