Torelli v. J. P. Enterprises, Inc. (52 Cal. App. 4th 1250, 1997)

Opinion

SILLS, P. J.

Introduction

A real estate broker had a listing agreement to sell certain commercial property, but that agreement expired. A month later the broker found a buyer for the property. The broker presented to the seller a standard form real estate purchase contract signed by the buyer, which called for the broker to be paid a 2.5 percent commission. The seller signed a counteroffer, which, with several exceptions not relevant to this appeal, accepted the terms of the offer set out in the purchase contract, including the commission arrangement. The counteroffer was set to expire in just a few days.

The counteroffer was not accepted before the expiration date. After the expiration the parties began negotiating on their own and soon came to an agreement. Understandably miffed, the broker sued to recover his commission. The seller requested summary judgment, claiming that expiration of the counteroffer ended any obligation to pay the broker a commission. The trial court agreed, and granted the motion.

The trial court erred. The promise to pay the broker a commission did not die with the expiration of the counteroffer to the buyer. When the seller signed the counteroffer, it became bound by an implied promise not to deprive the broker of the benefits of the bargain to pay the commission. The law does not allow a broker to be cheated out of his or her commission by the simple artifice of entering into direct negotiations and making substantially the same bargain, albeit without the commission. Accordingly, we reverse the judgment.

Facts

In January 1995 Carolyn Melstrom met Guy R. Torelli while viewing a property for sale. Melstrom, a licensed real estate agent herself, was looking for “residential income property” to buy for her and her elderly mother. As the property viewed was not suitable, Torelli suggested they visit a property owned by J. P. Enterprises, Inc. that might still be available. Torelli had been the exclusive listing agent for this property during summer and fall of 1994.

As the fates would have it, Melstrom was interested. Torelli assisted Melstrom in preparing an offer on the property for $1,375,000. The document included a 5 percent commission, to be split between Torelli and the O’Brien Company, the buyer’s broker. The language governing the commission arrangement was: “Seller agrees to pay compensation for services as follows: [<¡0 2 1/2 % of price, to Torelli Investment Realty, Broker, and [