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Dundics v. Eric Petro. Corp. - 2018-Ohio-3826, 155 Ohio St. 3d 192, 120 N.E.3d 758

Rule:

Under R.C. 4735.02(A), no one shall act as a real-estate broker without a license. R.C. 4735.01(A) defines "real estate broker" as any person or entity who, for compensation or other valuable consideration, performs certain activities, including negotiating the lease of real estate, holding one's self out as engaged in the business of leasing real estate, and the procuring of prospects or the negotiation of any transaction which does or is calculated to result in" the lease of real estate. Thus, to conduct any of these activities, a real-estate-broker's license is required. R.C. 4735.21 precludes a cause of action by someone seeking compensation for the activities described in R.C. 4735.01(A) without proof that the person is a licensed real-estate broker. The statute includes a broad definition of "real estate." Under R.C. 4735.01(B), real estate includes leaseholds as well as any and every interest or estate in land situated in this state, whether corporeal or incorporeal, whether freehold or nonfreehold, and the improvements on the land, but does not include cemetery interment rights.

Facts:

In 2014, appellants, Dundics and others, filed a complaint against appellees, Bruce E. Brocker and Eric Petroleum Corporation (collectively, "Eric Petroleum"). The complaint alleged that in 2010, Dundics met with Brocker "to discuss a venture of acquiring oil and gas leases" for Eric Petroleum, leading to an agreement by which "Dundics would find property owners, negotiate gas leases, and work with * * * Eric Petroleum to obtain executed gas leases." In exchange, Eric Petroleum would compensate appellants with a fixed payment for every leased acre and a percentage of the proceeds from working wells placed on the leased land. The complaint further alleged that Dundics was not required to be a licensed real-estate broker because oil-and-gas leases are not transactions involving real estate. Because Eric Petroleum allegedly refused payment for certain leases for which appellants demanded payment, appellants sought compensatory and punitive damages for claims in breach of contract, conversion, fraud, unjust enrichment, and quantum meruit.

Eric Petroleum moved to dismiss, arguing in part that the complaint failed to state a claim because it did not allege that Dundics was a licensed real-estate broker and R.C. 4735.21 precludes a person without a real-estate-broker's license from bringing a cause of action to recover compensation owed for certain real-estate activities. The trial court granted the motion to dismiss, which was affirmed by the Seventh District Court of Appeals.

Issue:

Whether oil-and-gas land professionals, who help obtain oil-and-gas leases for oil-and-gas-development companies, must be licensed real-estate brokers when they engage in the activities described in R.C. 4735.01(A) with respect to oil-and-gas leases.

Answer:

Yes.

Conclusion:

The court affirmed the judgments below to dismiss the complaint. The court found that R.C. 4735.21 precluded a person who is not a licensed real-estate broker from bringing a cause of action to recover compensation allegedly owed for negotiating oil-and-gas leases. Because the plain language of R.C. 4735.01 does not exclude oil-and-gas land professionals or oil-and-gas leases from the relevant definitions set forth in the statute, the court held that appellants, Thomas Dundics and his company, IBIS Land Group, Ltd., engaged in activities that required a real-estate-broker's license and were precluded from bringing a cause of action to recover compensation for those activities. The statute was not ambiguous, and the legislature had made certain exclusions from § 4735.01, i.e., cemetery interment rights. No such exclusion from the definition of "real estate" was made for oil-and-gas leases under § 4735.01.

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