Bruce E. Nakfoor v. Summer Grove, Ltd., Summer Grove Apartments, Admiralty Fund of America, Inc., Ralph Goodson and Belco Equities, Inc.

Citation: Not availableDocket: 03-92-00233-CV

Court: Court of Appeals of Texas; March 30, 1993; Texas; State Appellate Court

Original Court Document: View Document

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Bruce E. Nakfoor, a licensed real estate broker, filed a lawsuit against Summer Grove, Ltd., Admiralty Fund of America, Inc., Belco Equities, Inc., and Ralph Goodson to recover a real estate commission. The district court issued a take-nothing judgment against Nakfoor following a bench trial, which the Court of Appeals affirmed.

In 1989, Nakfoor sought to broker the sale of the Summer Grove Apartments, owned by Coast Savings, Inc. He was promised a commission of $40,000 by Rudy Belton of Belco Equities, contingent upon his introduction of Belton to the appropriate Coast Savings representative and the successful acquisition of the property. Nakfoor facilitated a conference call with Belton and Tom Wright from Coast Savings.

On August 4, 1989, Coast Savings submitted a written offer to sell the Apartments to Goodson, which included a commission structure not exceeding three percent of the sales price to another broker, Martin Palmer. Goodson accepted the offer on August 7, and on August 8, Belton sent a letter to Nakfoor confirming the commission agreement, stating it would be paid by the purchasing entity if the buyer formed a partnership.

Subsequent communications revealed that funds for the purchase would come from a 1031 exchange, facilitated by a corporation named Art Equities, which ultimately entered into a purchase agreement with Coast Savings on September 22, 1989. This agreement stated that Martin Palmer was the only broker involved. Goodson later confirmed the commission in another letter sent by Belton on October 3, 1989. 

Art Equities purchased the Apartments and assigned its rights to Summer Grove, Ltd. on December 13, 1989. After Nakfoor sought his commission, both Belton and Goodson refused payment, leading to Nakfoor's lawsuit. The trial court found against Nakfoor, resulting in the affirming judgment by the appellate court.

Key conclusions of the court included: 1) Nakfoor was prohibited from collecting the disputed commission due to the inadequacy of the property’s legal description under the Statute of Frauds; 2) Belton and Belco lacked the actual or apparent authority to commit Admiralty Fund, Summer Grove, Ltd., or Goodson; and 3) Goodson was not personally liable for the commission.

In addressing the Statute of Frauds, Nakfoor argued that the legal description of the Apartments in the written agreements was adequate and suggested that the documents should be interpreted together to fulfill any missing elements. Alternatively, he contended that the doctrine of part performance rendered the Statute inapplicable. The Real Estate License Act mandates that any real estate commission agreement must be in writing and signed by the party to be charged, which aligns with the Statute of Frauds. The statute necessitates a description of the property that allows for reasonable identification. Courts have ruled that a general description sufficient for someone familiar with the area is adequate. For commission agreements, the description does not need to be as detailed as that required for deeds.

Nakfoor cited two cases, James v. Baron Indus., Inc. and Krueger v. W.K. Ewing Co., Inc., as precedents where property was identified satisfactorily by its common name. He argued that the descriptions “Summer Grove Apartments, Austin” and “Summergrove Apartments, Austin” in this case similarly met statutory requirements, corroborated by additional documents referencing the Apartments. The court concluded that the commission agreement letters fulfilled the Statute of Frauds and the Real Estate License Act’s written requirement, thus sustaining Nakfoor's first point of error and rendering the part performance doctrine moot.

In his second point of error, Nakfoor claimed that the trial court erred by not recognizing that Belton and Belco had apparent authority to bind Goodson and Admiralty Fund to the commission payment, asserting that a partnership existed between Goodson/Admiralty Fund and Belton/Belco, giving Belton/Belco the authority to bind the entire partnership.

Nakfoor asserts that, even without a partnership, Belton/Belco had apparent authority to act on behalf of Goodson/Admiralty Fund. He claims the trial court made legal errors, but the court will review under both "conclusive evidence" and "against the great weight and preponderance of the evidence" standards. The court emphasizes that when assessing a point of error challenging a factual finding, it must consider only evidence supporting the finding. Goodson indicated that Belton's promises were intended for a future partnership, and he did not authorize any commission promises to Nakfoor. No direct authorizations for Nakfoor's commission were provided by Goodson, Admiralty Fund, or Summer Grove, Ltd. The court found that Nakfoor did not meet his burden of proving a partnership or agency relationship, thus affirming the trial court's refusal to recognize Belton/Belco as having authority to bind Goodson/Admiralty Fund to a commission agreement. 

In regard to Nakfoor's argument concerning Belco's liability, the court noted that he stipulated in open court not to pursue claims against Belco as a separate entity but only as a general partner of Summer Grove, Ltd. Since the court upheld the take-nothing judgment for Summer Grove, Ltd., Belco could not be held liable. 

Lastly, Nakfoor's request for a default judgment against Goodson was denied by the trial court because Goodson had not been formally served, and his appearance did not equate to proper service under Texas Rules of Civil Procedure, which requires strict adherence to service protocols. The trial court's denial of the motion for default judgment was thus deemed appropriate. All points of error raised by Nakfoor were overruled.

The trial court's judgment is affirmed, as Nakfoor's first point of error does not impact the ruling. The court noted that Summer Grove Apartments was referred to as Summer Grove, Ltd. in the judgment but maintains consistency by including both names in the case title. Goodson, a principal stockholder and president of Admiralty Fund of America, Inc., is identified as an appellee. Section 1031 of the Internal Revenue Code, which allows for nonrecognition of gains or losses from like-kind property exchanges, is referenced. Testimony revealed that Nakfoor was excluded from the contract due to negative feelings between him and Coast Savings's asset managers, although he claimed to have agreed to this exclusion. Additionally, evidence highlighted Nakfoor's uncertainty regarding the Apartments' county location, which contributed to the trial court's finding that the Statute of Frauds barred his claim for a real estate commission. The Real Estate License Act's section 20(b) aims to prevent fraud by mandating written commission agreements, as established in relevant case law.