The Penguin Club sat at the least-used end of Sunset Beach — a squat ring of solid poured concrete tents encircling a thatched cabana and a 12×14 poolette. It had the frantically cleaned and single coat-over-chipped-paint look of an aging property whose owner wanted out. Jim McGinty whistled as he drew himself out of his car near the motel office. Resting his eyes on the hard patio around him for only a second, he looked out into the morning sky over the gulf. “Treasure Island,” he thought, “indeed.”
* * *
“A.M. telegram for A.T. Dorsey!” the deliveryman barked.
Dorsey put his Daily News and coffee down on the table at the Greek pizzeria. A curl of his lip ensued. It was from Emma E. Taylor, Orange County belle and sometime hotel operator.
“Prior cash offer not materialized [stop]. Asking price $55,000 [stop]. Will consider any reasonable bid from anyone wishing to buy [stop]. Offers must include $25,000 cash [stop].” Dorsey read the first sentence twice more just as his company arrived and seated themselves.
“Ladies and gentlemen,” he intoned, adjusting his felt hat, “we are going to buy you a piece of heaven, and by that I mean Florida. Pack your money and your bags.”
* * *
These are fictionalized accounts of real Florida case facts. Their common thread is a real estate agent. The first story continues as the agent obtains an exclusive listing agreement, places a $2 classified ad, and then arrives to collect his commission after the owner finds a buyer by himself. In the second tale, the agent gets his buyers from New York down to Florida ready to close on an agreed deal, only to see the buyer back out. Both tales end the same way — the agents obtained their commissions in court. With only slightly different facts, the outcomes would have favored the owners.
The Procuring Cause Doctrine
In Florida, during 2005, there were 258,000 residential real estate sales involving Realtor®-designated agents alone.1 C onventionally, most agents derive their income solely from commissions. So when there is a sale, or an almost-sale, and a dispute breaks out over whether a real estate commission is owed, it focuses an agent’s attention in a way the salaried among us would not understand.
The legal principle derived from decades of lawsuits filed by focused, betrodden real estate agents is the procuring cause doctrine. It applies in commercial and residential contexts, and even to brokered sales outside of real estate, such as sales of yachts. It is a principle of law that is likely to visit most Florida lawyers during their lifetimes, either as an attorney, counselor, or worse, as a buyer or seller of real estate, or worse yet, as a blood relation of a real estate agent. Understanding the principle fully from the foundation up can be accomplished by reviewing five Florida Supreme Court opinions.
The First Foundation — Commission Vests Upon the Seller’s Acceptance
The procuring cause doctrine in Florida was born in Taylor v. Dorsey, 19 So. 2d 876 (1944), the case of Emma E. Taylor’s hotel. Dorsey, through a series of doubtlessly beguiling letters, convinced Ms. Taylor that she could take $5,000 down, not $25,000, and as luck would have it, he had the buyers who had that $5,000 and who could pay $500 a month on the balance.2 M s. Taylor was outwardly somewhat equivocal in tone, but if she didn’t like Dorsey’s deal, she regrettably used words such as “our contract” and “closing” to describe what had developed between her and Dorsey’s eager buyers.3 W hen the caravan arrived in Orlando for a closing, Ms. Taylor rebuffed them on the grounds that she was unable to evaluate the buyer’s credit and, therefore, could not commit to accepting the balance of the price in $500 increments.4 T he purchasers were disappointed. Dorsey sued. And what evolved from this suit was a question the WWII-era Florida Supreme Court posed to itself and then answered.
The issue was: When an agent is employed to procure a purchaser ready, willing, and able to buy, and that buyer’s offer is eventually accepted by the seller, what happens?5 T he answer was provided in two parts. Part I of the answer focuses on the owner and stated that when a sale is at the offer stage, an owner who has enlisted an agent who brought the offeror or the offer can reject the offer, but if he or she accepts, he or she must pay the broker his or her fee.6 P art II focuses on the agent and states that if the broker has brought the parties together and a sale is effected as a result of continuous negotiations inaugurated by him or her, he or she will not be denied compensation simply because the owner reconsiders the terms upon which the sale will be effected having already accepted the broker’s buyer’s offer.7 T he foundational lesson from Taylor is that an agent’s claim for commission vests with the acceptance of the purchaser’s offer — the agent may earn a real estate commission under the procuring cause doctrine even if a sale does not close.
The Second Foundation — Continuous Negotiations and Communications are Prerequisites to Vesting
the major question that Florida lawyers and inferior courts were left with was “What are ‘continuous negotiations?’” Eleven years after Taylor, the Supreme Court issued Shuler v. Allen, 76 So. 2d 879 (Fla. 1955), which set forth a definition of “continuous negotiations” that the court described as being fair to both an agent and an owner. “Continuous negotiations,” the Supreme Court said, “means continuous negotiations between the seller and the prospective purchaser conducted by the broker.”8 T his rule meant that an agent could not keep negotiating with an owner on behalf of several lookers, or perhaps a future purchaser to be found, and expect to satisfy the Taylor rules. It also meant that an agent could not disappear from the owner for long periods, even while working diligently to ratchet up a purchaser’s offer price.
The Supreme Court would revisit and refine this continuity concept again in Richland Grove & Cattle Co. v. Easterling, 526 So. 2d 685 (1988), in which it held that an agent who ceased contact with his owner for a period of 30 months had not only failed to meet the continuous negotiation requirement of the procuring cause doctrine, but also had actually abandoned by conduct an oral agreement to list made years earlier, freeing the owner to sell to anyone — even a purchaser originally found by the agent.9
The second foundational concept is that for an agent to reach the vesting of his or her right to commission with the acceptance of the buyer’s offer, merely initiating the sales negotiations is not enough — the agent must keep the owner and the prospective purchaser communicating, and above all, must continue communication with the owner from the initial meeting through acceptance.
The Third Foundation — The Procuring Cause Doctrine Yields to Contract Law Where There Is a Listing Agreement Providing an Exclusive Right to Sell
There is, of course, a major exception to the application of the doctrine — the exclusive right to sell agreement. In Flynn v. McGinty, 61 So. 2d 318 (1952), the agent, Jim McGinty, had the prescience to bring a buttoned-down form agreement calling for exclusive listing rights to his meeting with the Penguin Club’s anxious owner.10 T he owner’s eventual objection to McGinty’s suit for his commission was that he only placed a classified ad to which no one responded, so that he should recover his $2 worth of expense back from the owner, but nothing more, considering the lack of effort.11 W hat won the day for McGinty was not the question of effort or the manner of the meeting of the buyer or seller — it was the airtight exclusive listing contract. The Flynn court ruled that contracts such as the one McGinty entered into are enforceable and hold up even when the agent does not do all that much work in creating the sale.12 A nd the ruling was a matter of simple contract law — the procuring cause doctrine did not control. This yields our third foundational concept: The procuring cause doctrine is generally inapplicable in a scenario where there is an exclusive listing agreement on the owner’s property. Contract law takes control in these situations, and the contract controls the owner’s liability to the agent for a commission after a sale.
The Fourth Foundation — Intervening Causes of Sale Remove a Transaction from the Reach of the Procuring Cause Doctrine
Exclusive listing contracts are not the only major exception to the principle’s application. In Darracott v. Hemphill, 82 So. 2d 719 (1955), an anxious agent ran all the way from the owner’s orange grove to the local school board to pitch the commissioners on the grove as a home for a new school building.13 H e was so anxious, in fact, that he garbled the acreage, overstating the grove’s size by 10 acres.14 T he school board gave him a price, but when he corrected the size, they cooled, now only wanting to buy half the land. Not interested in a partial sale, the owner told the agent to forget it, and the agent gave up. Sometime later, the wily school board sent an appraiser to the grove to inform the owner that an appraisal had been ordered in advance of a condemnation proceeding.15 P anicked, the owner came around to the board’s idea of a partial sale and sold 15 acres without the agent’s involvement.16 T he agent sued and lost. On appeal, in the same year that the Supreme Court defined “continuous negotiations” in Shuler, it found here that Taylor did not apply, since the broker had “discontinued negotiations.”17 A ssuming that the Supreme Court’s Shuler definition was applied in Darracott, the anxious agent was faulted for ceasing contact with the owner and because the owner and the school board had stopped talking for a period of 30 to 60 days — a stretch of time the Daracott court describes as sufficient to bar the application of the procuring cause principle. And yet, a closer look at Darracott suggests that the agent stopped trying because he was ordered to, and he followed the owner’s order.
Perhaps sensing the creeping disquiet that could grow from long consideration of whether the Darracott broker was really to blame for the break-off of effort, the Darracott court announced a second, more intriguing reason why the procuring cause doctrine would not apply — there can be an independent or intervening cause of a sale, and in this case the independent cause was the pressure created on the owner by the school board’s threat of condemnation.18 T hus, the fourth foundational concept: The procuring cause doctrine is inapplicable in situations where there is an independent or intervening cause of a sale.
A Present Day Restatement
We have covered two opinions setting forth major prerequisites for and two carving out major exceptions to the procuring cause doctrine. This principle today appears in over 150 Florida appellate opinions. In view of this level of doctrinal throughput, it is not surprising that the original rulings set forth in Taylor have been deconstructed slightly into elements suitable for convenience during pleading or writing summary judgment motions. These reduced rules were approved and delivered by the Supreme Court in Rotemi Realty, Inc. v. Act Realty Co., Inc., 911 So. 2d 1181 (Fla. 2005). These recently restated, modern Rotemi Realty elements are what plaintiffs and defendants need to consider the presence or absence of as they evaluate a procuring cause doctrine issue today. Under Rotemi Realty, procuring cause is said to occur (outside of an exclusive listing agreement) where the agent 1) initiates negotiations by doing some affirmative act to bring the buyer and seller together, and 2) remains involved in any continuing negotiations between the buyer and the seller, unless they intentionally exclude him or her.19 T here is no suggestion in Rotemi Realty that the exclusive listing agreement or independent cause exceptions do not remain applicable, and so following general Florida Supreme Court jurisprudence pertaining to the court’s stewardship of its own prior opinions,20 t hese exceptions remain.
A Mirror of Fairness
Since Taylor, the procuring cause doctrine has been chiseled and polished in many scores of reported opinions, and, we can be certain, has been tested, stretched, and reinvented in hundreds more anonymous trial court contests. And yet Taylor sets forth the doctrine plainly enough — raising the question of why so many courts, including a great many district courts of appeal, writing quite good opinions upon it, have occasioned to revisit it so often. Were one, chasing after the jurisprudential essence of the doctrine, to print and read every procuring cause opinion in Florida, reported and unreported, sifting for similarities and themes, plotting facts and outcomes in a wall-sized matrix of textual archaeological splendor, the answer to our question would come to this: Fairness, it seems, has never been captured in one set of words. And the procuring cause doctrine in Florida, from Taylor onward, has existed as an attempt by courts to present a mirror of fairness to the opposed proponents of two differing, competing images of how and why real property was sold. The answer one comes away with after reading even a dozen procuring cause doctrine opinions at a time is that in the hands of a court, the focus of the doctrine can shift, as can the angle of a hand-held mirror, to differing relevant aspects of a landowner-agent transaction, as fairness, or better yet, the presence of unfairness, requires. This comforting conclusion is also a caution — it means that Rotemi Realty has long odds on being the end of the history of the doctrine, the unchanging final expression of the fullness of procuring cause.
A real estate agent’s value to an owner varies. The foundational principles establishing the rules of the commission game between agents and the owners they represent, as a general rule, do not. For some owners, each of their real estate agents will forever be typecast as the absentee lottery winner. For some agents, each of their owners are fickle, frustrating, and unfair. The fact that real estate sales are a perpetual mainstay of Florida’s economy is compelling unspoken testimony that most agents and owners are far more sensible, moderate, and fair than these extremes. The foundational concepts of the procuring cause doctrine, the components and the major exceptions discussed above, and the Florida Supreme Court’s synthesis and presentation of their elements exist for their mutual protection.
1 A ccording to the Florida Association of Realtors statistical records, media.living.net/statistics/statisticsfull.htm.
2 Taylor v. Dorsey, 19 So. 2d at 878 (1944).
3 Id. at 878-880.
4 Id. at 879-880.
5 Id. at 878.
6 See id.
7 See id.
8 Shuler v. Allen, 76 So. 2d at 882-83 (Fla. 1955).
9 Richland Grove & Cattle Co. v. Easterling, 526 So. 2d at 687-88 (1988).
10 Flynn v. McGinty, 61 So. 2d at 318 (1952).
11 Id. at 319-20.
12 Id. at 320.
13 See Darracott v. Hemphill, 82 So. 2d at 720 (1955). The agent did not literally run.
14 See id.
15 See id.
17 See id.
18 C ondemnation, however, should not automatically be accorded independent cause status, however. In St. Joe Corp. v. McIver, 875 So. 2d 375 (Fla. 2004), the Florida Supreme Court ruled that in a situation in which an owner encourages the real estate agent to catalyze a condemnation for strategic or market-value purposes, and the parties either agree that the condemnation is part of their tactics of sale or such is implicit between them according to their conduct, general contract principles allow the agent to recover his or her commission against the condemnation monies as he or she would with any other sale because the condemnation is part of their agreement.
19 Rotemi Realty, Inc. v. Act Realty Co., Inc., 911 So. 2d at 1189 (Fla. 2005).
20 T he Florida Supreme Court follows the doctrine of stare decisis under which it follows its own precedents unless there has been “a significant change in circumstances after the adoption of the legal rule, or. . . an error in legal analysis.” Dorsey v. State, 868 So. 2d 1192, 1199 (Fla. 2003).
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