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TRANSPORT PROPERTIES, INC. v. ABC TREADCO

June 18, 1984

TRANSPORT PROPERTIES, INC., Plaintiff, against ABC TREADCO, INC., and RED STAR EXPRESS LINES OF AUBURN, INC., Defendants.


The opinion of the court was delivered by: WEINFELD

EDWARD WEINFELD, D.J.

In this diversity action, plaintiff, Transport Properties, Inc. ("Transport"), seeks recovery of a real estate brokerage commission alleged to be due on the sale of a trucking facility in Baltimore, Maryland, by defendant, ABC Treadco, Inc., successor in interest to Arkansas Bandag Corporation (collectively, "Treadco"), to defendant, Red Star Express Lines of Auburn, Inc. ("Red Star"). Defendants jointly move for summary judgment dismissing Transport's claims for (1) breach of contract, and (2) conspiracy to deprive plaintiff of its commission.

 On January 3, 1979, Transport and Treadco entered into an agreement whereby Treadco appointed Transport "exclusive agent with the sole and exclusive right to negotiate for and to sell the truck terminal . . . [at] 5495 Levering Avenue, Baltimore, Maryland, . . . [for] $610,000." Treadco reserved "the right to accept any lower offers or to accept any offers for a lease."

 The stated term of the agency was to be ninety days, and, if a transaction were consummated during the ninety-day period, Transport would be entitled to a "brokerage commission calculated at six percent (6%) of the sales price or total net lease payments." The agreement also provided that plaintiff would receive a "full" six percent commission if "a transaction is consummated during the four (4) month period following the expiration of this agreement with any party to whom Transport Properties offered the premises."

 No sale to "any party to whom Transport Properties offered the premises" occurred within the ninety-day term or the following four months. Transport, however, did conduct negotiations with Red Star on behalf of Treadco, which resulted in an agreement whereby Red Star leased the trucking facility for two years with an option to purchase. A letter of January 29, 1979, from Transport's president, David Ettenberg ("Ettenberg"), to Woody May ("May"), a Treadco vice-president, sets forth the terms of the proposed lease/option. On March 6, 1979, the lease/option agreement was signed by representatives of Treadco and Red Star, granting Red Star a leasehold of the premises from April 1, 1979, through March 31, 1981. The lease contained an option clause and also provided for payment of brokerage fees to plaintiff, as follows:

 XIX. During the first eighteen months of the lease term, the Tenant will have the right and option to purchase the leased premises for the sum of $575,000.00 cash.

 . . .

 The Landlord and Tenant agree that Transport Properties, a real estate broker[,] . . . was the agent for the Landlord in obtaining the lease and purchase option. Upon execution of the lease by the parties hereto, the Landlord will pay to Transport Properties a commission in the amount of 6% of the total net lease payments of the lease term. In the event the property is purchased by the Tenant as provided herein, an additional commission of 6% of the sales price shall be due and payable by the Landlord to Transport Properties at the time of closing of the transaction, less any commission received for any unexpired portion of the lease.

 Plaintiff, by its president, also was a signatory to the agreement. Transport was paid the six percent commission on the total net lease payments, an amount totalling $7,416.00. *fn1"

 It is undisputed that Red Star did not exercise its option to purchase the trucking facility within the eighteen-month period specified in the lease as commencing on April 1, 1979. However, more than four months after the expiration of the option period, but a month before the termination of the lease, Red Star and Treadco, on February 25, 1981, entered into an agreement of sale whereby Red Star purchased the property for $480,000.00. The title closing was on March 31, 1981. Plaintiff did not participate in the negotiation of the purchase contract. Plaintiff asserts that even though the purchase option was not exercised by Red Star prior to its expiration, it is entitled to an additional commission of six percent based, not on the reduced sales price of $480,000.00, but on the original option price of $575,000.00. *fn2"

 As our Court of Appeals has often stated, on a motion for summary judgment, "a court "must resolve all ambiguities and draw all reasonable inferences in favor of the party against whom summary judgment is sought, . . . with the burden on the moving party to demonstrate the absence of any material factual issue genuinely in dispute[.]" *fn3" Yet while our Court of Appeals has rigidly applied Rule 56 to ensure that no litigant is deprived of its right to a jury trial, at the same time it has recognized that, if Rule 56 is to be more than a dead letter, it must be applied to permit the granting of judgment where a jury trial would be a mere formality. *fn4"

 The issue here centers about whether, pursuant to the terms of the parties' agreement, Transport is entitled to a six percent commission on the sale of the Baltimore property to Red Star almost five months after expiration of the option period specified in the lease/option agreement. The parties agree that, under New York's "grouping of contacts" test, which renders applicable the "law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation," *fn5" a New York court would resolve the issue by resorting to the substantive law of Maryland. *fn6"

 Analysis of the applicable law and the parties' contentions must begin with Maryland Real Property Code § 14-105 (1974), which provides:

 In the absence of special agreement to the contrary, if a real estate broker employed to sell, buy, lease, or otherwise negotiate the property, procures in good faith a purchaser, vendor, lessor, lessee, mortgagor, mortgagee, borrower, or lender, as the case may be, and the person procured is accepted by the employer and enters into a valid, binding, and enforceable written contract, in terms acceptable to the employer, of a sale, purchase, lease, mortgage, loan, or other contract as the case may be, and the contract is accepted by the employer and signed by him, the broker is deemed to have earned the customary or agreed commission. He has earned the ...


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