Procuring Cause Doctrine Does Not Override Express Contract Terms
The phrase “procuring cause” frequently arises in discussions between brokers and their clients when they disagree about whether a commission is owed. Most often the broker will reference the doctrine as part of an argument about why the broker should be paid a commission (because the broker presented the buyer who ultimately closed on the sale). Sometimes the client will raise the doctrine for the opposite reason: to argue that the broker is not entitled to a commission, despite the obligations that may be set forth in a listing agreement, because the broker did not actually procure the buyer.
As a Florida appellate court recently reminded everyone, however, the procuring cause doctrine does not override the clear provisions of a listing agreement. See Esslinger-Wooten-Maxwell, Inc. v. Lones Family Limited Partnership, Case No. 3D19-135, 2020 WL 465076 (Fla. 3d DCA Jan. 29, 2020). In that case, the broker and the client entered into a written listing agreement that required the payment of a commission to the broker if the broker sold the property during the twelve-month listing period or within twelve months after the listing period if the ultimate buyer was presented during the original twelve-month listing period. In other words, there was a twelve-month listing period following by a twelve-month tail. The appellate court explained the facts of the case as follows:
EWM introduced the Lones Family to prospective buyers, Fernando and Ignacio Zulueta, during the contract period; however, the parties never entered into an agreement for sale or lease of the property.
In February 2012, after the expiration of the listing agreement and protection period, the Lones Family entered into a listing agreement with World Business Brokers, Inc. (WBB). WBB re-introduced the Lones Family to the Zuluetas in August 2012, but ultimately, negotiations fell through. The undisputed record evidence is that the Zuluetas never leased or purchased the property.
In June 2013, the Lones Family entered into a lease agreement with Somerset Academy, Inc. The Lones Family paid WBB 7.5% commission on the lease. Later, in May 2017, the Lones Family and Somerset closed on an “As Is” Contract for Sale and Purchase of the property. The Lones Family paid WBB 7.5% commission for the sale.
EWM sued the Lones Family for breach of the listing agreement seeking commission on the lease and eventual sale of the property to Somerset. EWM alleged it was the procuring cause of the sale arguing that the Zuluetas and Somerset were the same buyers. Thus, EWM claimed it was entitled to commission under the procuring cause doctrine because it initially introduced the Lones Family to the Zuluetas during the period of their listing agreement and was intentionally excluded from negotiations.
Id. (footnotes omitted).
In addressing the arguments raised by the broker (EWM), the appellate court first focused on whether the listing agreement constituted a “special contract” because “Florida law dictates that in the absence of a special contract, a broker is entitled to a commission when that person is the procuring cause of the sale.” Id. (quotations and citations omitted). The appellate court concluded that the listing agreement was a “special contract” and explained: “It follows that, where an express contract (such as the EWM listing agreement) limits the protection period, the procuring cause doctrine cannot be inferentially incorporated to supersede the formalized intent of the parties to the written agreement.” Id. In other words, if the parties have a written agreement, the court will not use the procuring cause doctrine to override the provisions of that written agreement. Therefore, the appellate court affirmed summary judgment in favor of the client and against the broker.
The motto of this story: the procuring cause doctrine will typically not rescue the broker or the client from clear contract language.