Insight

Court Awards Realtor Commission and Attorney’s Fees Despite Breach of Purchase Agreement

Published on: January 26, 2021

The owner of a strip mall retained a realtor to list available property in its shopping center. A purchase agreement was secured and set a deadline to complete the sale. When the purchaser did not complete the sale, the realtor sued the purchaser for lost commission. See Beau Box Commercial Real Estate, LLC v. Pennywise Solutions, Inc., 2019-0114 (La. App. 1 Cir. 10/23/19), 289 So. 3d 600. The case raised the issue of whether the realtor was a third-party beneficiary to the purchase agreement.

After the sale fell through, the realtor filed suit against the purchaser to recover commission for the sale of the property, attorney’s fees, and other costs. In response, the purchaser admitted to the breach of the purchase agreement but argued that the listing agent had no right to recover because it was not a party to the purchase agreement. The trial court disagreed and granted summary judgment in the realtor’s favor. The trial court held that the purchase agreement established a “stipulation pour autrui”(third-party benefit) for the realtor.

The court acknowledged that agents generally are not parties to purchase agreements. However, the language of the specific purchase agreement conferred a benefit in favor of both agents because it explicitly stated that a party defaulting on the purchase agreement “shall be liable” for realtor’s commissions, attorney’s fees, and costs incurred in the enforcement of the contract.

The court also rejected the purchaser’s second argument that it had to be “placed in default” before any cause of action could arise. In response, court found that, when a term for performance is fixed in a contract, the arrival of that term automatically puts the breaching party in default.

The result in Beau Box may be limited to its own facts. However, realtors and parties should now pay closer attention to the terms of purchase agreement, which can create benefits for non-parties to the contract.

Marty Golden has been practicing law based in Baton Rouge, Louisiana for over thirty years, concentrating in civil litigation primarily involving injuries, property damage, insurance coverage, and contract disputes. Much of his practice is defending and advising real estate agents in suits by property buyers and sellers, but Marty also defends other professionals, insurance companies, manufacturers, and business owners. Marty has a special interest in all things procedural, because they are the rules of the road for litigators and knowing them better than his opponent gives him a leg up in court.

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Insight

Supreme Court Rules Against Broad Application of Indemnity Provision in Engineer’s Contract

The Supreme Court ruling in Couvillion Group, LLC v. Plaquemines Parish Government, 2020 -00074 (La. 4/27/20) is a reminder that an indemnity claim must be sufficiently related to the principal demand and that contract indemnity provisions are to be strictly construed.

In Couvillion, the general contractor sued the owner of a public works port project for contract delay damages resulting from a cease work order issued to allow redesign of a fuel tank platform. When the contractor submitted its delay claim, the owner requested that its project engineer review it and make recommendations. The engineer recommended payment of a little over $1 million dollars. When the owner refused to pay, the contractor sued. In response, the owner filed a third-party demand against the engineer alleging that its recommendation was erroneous and excessive and that, if it was bound by the engineer’s recommendation, then the engineer must indemnify the owner.

On behalf of the engineer, Keogh Cox attorneys argued that the engineer should not be required to reimburse the owner for any delay costs and asked for dismissal through an exception of no cause of action. Code of Procedure Article 1111 provides that a defendant in a principal action may bring in any person who may be liable to him for all or part of the principal demand. Here, that was not the situation. The engineer was not liable to the owner for any part of the contractor’s delay claim because the engineer did not cause the delay. The delay damages were incurred before the engineer made a recommendation for payment. The events giving rise to the two claims were separate and distinct: the main demand arose from the project delay and the third- party demand arose from the engineer’s recommendation of the claim amount. The Court commented that the principal claim against the owner for delay damages was too attenuated from the owner’s claim against the engineer, thus the third-party demand was improper.

The owner also relied on the indemnity provision in the engineer’s contract that required the engineer to indemnify the owner against any and all claims for personal injury or “damages to property” that may arise from its services. The Court held that the plain meaning of the term did not include the economic-only losses related to the subject delay claim. The Court further reasoned that indemnity agreements are to be strictly construed, rejecting the owner’s broader interpretation.

Insight

A Decade Old Article Finds New Life: Televised Testimony

Courts across the country now grapple with the changing face of trials in a time of social distancing and spikes of COVID-19 complicated by the confines of the courtroom. Attorneys and litigants must also adapt to this new “normal.” In this setting, an older law may help to bring new technology into the courtroom.

COVID-19 spawned the immediate use of videoconferencing and other technology in the courtroom. Fortunately, over a decade prior to the current pandemic, the Louisiana Legislature adopted Louisiana Civil Code of Procedure article 1633.1 which expressly provides for live televised testimony at a trial. Pursuant to Article 1633.1:

The court may order, upon a showing of appropriate safeguards, live testimony of a witness to be presented in open court by teleconference, video link, or other visual remote technology, if the witness is beyond the subpoena power of the court or when compelling circumstances are shown. The order may be entered at a pretrial conference or, in exceptional circumstances, on motion set for hearing at least ten days prior to trial or at another time that does not prejudice the parties.

The Article, titled “Live trial testimony by video,” does not limit the live video testimony feature only at trial. Commentary suggests that the term “trial” is intended to include evidentiary hearings on exceptions as well as summary matters. The comments further provide that a showing must be made to the court's satisfaction of appropriate safeguards, such as (1) reliable transmission procedures and image quality, (2) an orderly process for reference to exhibits by the witness and all counsel or parties conducting the examination, and (3) an absence of any outside influence on the witness during testimony. Even if all the parties agree to the use of live televised testimony, the Article nevertheless requires a court order.

Pursuant to the Article, the court may order televised testimony when “compelling circumstances are shown.” These circumstances may exist where a witness has a pre-existing condition or is restricted from live attendance by their physician. They may also exist for witnesses barred from work-related travel by their employer.

Although adopted in 2007, Article 1633.1 remains largely unused by both courts and litigants; it appears its time has come.

Insight

Black Boxes: The Secrets Your Vehicle Keeps

By Brian Butler

Many do not realize modern vehicles are always ready to record critical driving information. As with airplanes, most passenger vehicles are now equipped with Event Data Recorders (EDR), or "Black Boxes." This information may be critical after an accident to show what happened, and who was at fault.

EDRs may record pre-event data for five seconds before and one second after an accident, possibly including vehicle speed, engine speed, percent throttle, change in velocity, and whether the brakes were applied. The make and model of the vehicle will determine what data is available. If you want this data, you must act quickly because it will be “overwritten” at some point if the vehicle continues in use.

It is also important to retain a competent expert to download the data. In Laborde v. Shelter Mutual Insurance Co., 82 So. 3^rd 1237 (La. 3/9/2011), the trial court excluded the printout of data downloaded from a Black Box because of the boxes "chain of custody" and the method the information downloaded. It is important that your legal team knows how to obtain and preserve this evidence.

Data from Black Boxes can be useful in many ways. In some cases, it may help to prove that the accident involved a low impact or to show that no brakes were applied. In other cases, it may harm your position, but the data is almost always relevant. There are costs in downloading and interpreting the data. But in the right case, the secrets kept in the Black Box may be the only way to reveal the truth.

Brian has been doing defense work for the last 28 years. He has handled all types of defense matters over his career, but in recent years his practice has been focused in serious injury or damage cases and has worked extensively with experts involving complex cases, fire cases, and forensic work.