Mathews Partners, LLC v. Lemme - No. M2008-01036-COA-R3-CV, 2009 Tenn. App. LEXIS 667 (Ct. App. Oct. 2, 2009)

Rule:

Real estate brokers stand in a fiduciary relationship with their principals. They have a duty to refrain from prejudicing their principals' interests in favor of their own and a duty of honesty, candor and fair dealing to all those with whom they deal. Brokers cannot manipulate the documentation of a sale or the timing of a closing to conceal that a substantial profit will accrue to themselves. By the same token, however, a landowner who has listed his real estate with a broker cannot avoid a commission by taking the negotiations out of the hands of the broker after the broker had produced a purchaser.

Facts:

The real estate broker brought action against seller of property seeking commission following the sale of the property to buyers allegedly introduced to the seller by the broker during the term of the listing agreement. Upon cross motions for summary judgment, the trial court granted summary judgment to the seller finding that the listing agreement was unenforceable because there was no meeting of the minds and that there was a lack of mutual assent to the terms of the agreement. The broker appealed.

Issue:

Under the circumstances, was the broker entitled to commission for the sale of the real estate property to the buyers, thereby rendering the grant of summary judgment in favor of the seller an error? 

Answer:

Yes.

Conclusion:

The appellate court reversed the trial court’s decision, finding that the broker had procured a group of individuals who were interested in buying the property in June 2005, during the term of the listing agreement, and those same prospective buyers entered into a sales contract to purchase the seller's property within 90 days of the expiration of the listing agreement. According to the court, the broker acted consistently with his fiduciary duty to the seller by performing under the contract.