consultants are sandburs

Tuesday, March 05, 2013

On the Landform contract with Ramsey, and on it terminating later this month.

There was an email sent me about twenty days ago, when the question of Lazan/Landform having contracted to act, and acting in fact, as real estate brokers - agents hired on a commission basis, to find buyers for a seller's land. There was the regular cash drain too, but on closing, a commission. The email was from an attorney, excerpted (with a typo or two fixed):

I took the time to read the January 31, 2013 letter of Attorney Rob Shainess regarding the legality of the Landform contract. To his credit he identifies [... the questionable contract part as for] "assisting" in considering, evaluating and negotiating the sale of land. Mr. Shainess takes great pain to explain how Landform's duties are merely assisting, not "directly" negotiating, and therefore not covered by the broker license requirement. The problem with this, as everyone who has ever bought or sold real estate and used a realtor knows, is that your realtor is required to be licensed yet does not "directly" negotiate the deal. Rather, he or she "assists" you in "considering, evaluating and negotiating the sale." Mr. Shainess comes right out and admits this is what the contract contemplates, and indeed, states in plain language. Certainly if a common, everyday realtor who performs these tasks has to be licensed, Mr. Lazan must be as well.

Mr. Shainess also included somewhat of a misleading argument, probably knowing no one on the Ramsey City Council would be wise to it, by suggesting that the unpublished opinions cited in the anonymous memo are of no authority. The fact is, attorneys cite those all the time and they are relied upon by judges when the fact patters are very similar. Not to mention that the unpublished opinions are built on existing, published case law.

Very truly yours,

John M. Huberty
Attorney at Law

Well, start with the second paragraph first. Unpublished opinions are "not precedent" in one sense, but they are unpublished primarily because they are not deviating from or evolving clear and established law.

I believe the Pems case was at issue. Online here and here. The latter online version is from the Judicial Branch's law library case archive; and because it is "unpublished" it is captioned at the top as all unpublished cases there are,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2010).

(That means if cited, a copy needs to be served on the opposing party, indeed, all other parties. Same judges sit and write published and unpublished cases.) What is important, however is what § 480A.08, subd. 3(c) (online here) says:

(c) The Court of Appeals may publish only those decisions that:

(1) establish a new rule of law;

(2) overrule a previous Court of Appeals' decision not reviewed by the Supreme Court;

(3) provide important procedural guidelines in interpreting statutes or administrative rules;

(4) involve a significant legal issue; or

(5) would significantly aid in the administration of justice.

Unpublished opinions of the Court of Appeals are not precedential. Unpublished opinions must not be cited unless the party citing the unpublished opinion provides a full and correct copy to all other counsel at least 48 hours before its use in any pretrial conference, hearing, or trial. If cited in a brief or memorandum of law, a copy of the unpublished opinion must be provided to all other counsel at the time the brief or memorandum is served, and other counsel may respond.

Reading that language makes it inescapable, Pems is 100% in line with the existing law requiring that only licensed brokers can sue for a commission. And, calling it an "incentive fee" is diddling - it is paid if a deal is found which closes - i.e., it is a commission.

Were Pems in any way not 100% pure vanilla law, it would fit one of those criteria for judicial opinions to be published opinions. In short, Pems is the law. So much so, that it is unpublished.

Now, the first email paragraph - What does a broker do? A broker does not define a deal and do a cram down whether the client likes it or not. A seller's broker gets an offer, and presents it to the seller, and discusses it. With the principal. Then the principal either accepts it, counteroffers, or rejects it. That's all that can happen. If there is a counteroffer, the seller's agent presents it to the other party - the offering party, and that other party can accept, counter or reject. Back and forth like a tennis ball, until either a deal is struck and closed yielding a commission to the agent, or one or the other, seller or offering party breaks off the negotiation (which is conducted by the agent being the intermediary in presenting papers, and writing counteroffer changes to paper if the seller has not retained a lawyer to handle paperwork).

Now, I request any reader with a brokerage license to refine that understanding if in any way in error, or any lawyer reading can post a comment - helpful comments are always welcome.

Let's get to the facts - course of performance, independent of what the contract says and the argument emailed that the Landform lawyer is basically admitting what's what.

At least twice, I recall Colin McGlone emphatically stating - with at least one of those times at a televised meeting so that it is memorialized, "I want a salesman."

Nobody on council when that was said contradicted Colin, and I believe Lazan was present. He did not, as he sometimes does, run to the citizens' microphone to interject a statement.

Bottom line, Lazan was regarded and did not contradict the belief he was there as a salesman.

At a work session, Tossey said to the council and Lazan, that there would have to be a few "closings" or he would oppose extending the contract, gesturing with his thumb toward the door. In effect, deliver closings, or out of here, was the message. Nobody contradicted Tossey's understanding - no objection made by others on council, by staff (Nelson was present I recall), and Lazan was who Tossey was looking directly at when he spoke.

There can be little doubt that the past council, collectively, regarded Lazan as there to generate closings, or as McGlone aptly stated, "I want a salesman."

I cannot see Lazan suing for any fee he believes he is entitled to be given after the end of the month, I do not think staff or council should pay any commissions after end of March 2013, and I think it would be counterproductive if the council decided to sue for restitution of money already paid - mainly because it is likely that it's been spent, Lazan likely does not have errors and omissions coverage for actions brokering real estate, so even if a judgment as a matter of law may be attainable, can it be collected?

If there is no deep pocket to reach into for restitution, and if Lazan in winding down the relationship is professional with regard to pending matters, paperwork, and such - people should move on, including City of Ramsey saying water under the bridge, blood already donated, whatever, but move on.

I believe Bray is writing an opinion for the council, and I would hope that Tossey, Elvig, Backous and David Jeffrey who were on council then remind Bray of the course of performance detail - conduct and reliance - important things independent of course of negotiation of what was put onto paper and signed - what the folks over the months and months during which about a million and a half of city dollars were paid over into Lazan's ready hand; what did those people think they were buying, and how did Lazan's actual conduct and oral representations reinforce or cause any/all such beliefs.

In short, momma said, "Actions speak louder than words."

She was not a lawyer, but she was smart. And spot on correct.

On a Google Scholar search = "minn. stat." unpublished real estate license unlicensed broker

with search returns ordered by date, the search returned Pems along with two other 21st century unpublished cases dealing with a brokerage license being a jurisdictional requirement to maintaining suit in Minnesota for a real estate sale commission, online with Google Scholar here and here.

I present the links without having read either case, nor do I intend to. It's not my job, but I would hope that those on council, a generally bright bunch, may have a look and be prepared to discuss things with Bray and/or Goodrich, about course of performance evidence and its place in contract dispute or disagreement. Reading those two other unpublished cases from 2004 and 2005 cannot hurt, and it might help. Especially with an understanding of what M.S. Sect. 480A.08, subd. 3(c) clearly teaches.

___________FURTHER UPDATE___________
I did look at the Bridgeplace Associates opinion, and it was interesting because of a surviving slander of title claim against the unlicensed broker individual.

It likely will be irrelevant to the Ramsey-Landform situation, because of the likelihood Lazan will unwind his side of the contract professionally, and there will be no mechanics lien monkeyshine unless the City does not pay for engineering services. My understanding is Lazan was never remiss in recouping engineering fees soon after services were rendered.

That part of things would result in no lien, and with Lazan advised by Shainess, who has professional duties under Rule 11 and frivolous litigation law, Shainess likely would discourage any kind of bogus lien slander of title monkeyshine, if consulted about it in advance.

Problems should not not happen, for again, this should not be a contentious divorce, but one where the property decisions are cordially resolved, and clearly the City, for better or worse, has full, total custody of the unruly bastard child known as Ramsey Town Center, (or rebrands, change of name, etc.).

And wow, Ramsey has custody of the big sign on Highway 10. All that is Ramsey's good fortune.

Rosenberg involved a party who actually was licensed to broker real estate, and hence is irrelevant.

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