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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND THE BINSWANGER COMPANIES * * * * * * * * * * * *

v.

CIVIL NO. JFM-00-3192

MERRY-GO-ROUND ENTERPRISES, INC., MGR DISTRIBUTION CORPORATION, MGRR, INC., DEBORAH HUNT DEVAN, TRUSTEE, and KEEN REALTY CONSULTANTS, INC.

MEMORANDUM OPINION

In bankruptcy court, the Binswanger Companies ["Binswanger" or "appellant"] sought payment of a commission on a sale of real estate formerly owned by a Chapter 7 debtor. Part of Binswanger's case survived a motion to dismiss, Binswanger Cos. v. Merry-Go-Round Enters., Inc. (In re MerryGo-Round Enters., Inc.), 218 B.R. 361 (Bankr. D. Md. 1998) ("Binswanger I"), and the bankruptcy judge later denied summary judgment for Binswanger. Binswanger Cos. v. Merry-Go-Round Enters., Inc. (In re Merry-Go-Round Enters., Inc.), 231 B.R. 241 (Bankr. D. Md. 1999) ("Binswanger II"). After a trial, the bankruptcy judge denied payment, and Binswanger appeals to this Court. Binswanger argues that the bankruptcy court erred in refusing to appoint Binswanger nunc pro tunc as a broker for the estate, and that Binswanger is entitled to a commission under a Maryland statute protecting the rights of real-estate brokers who are the "procuring cause" of sales. -1-

I.

With this opinion, the number of published opinions addressing the bankruptcy of Merry-GoRound Enterprises and its affiliates ["MGRE"] reaches a round dozen. Devan v. Simon DeBartolo Group, L.P. (In re Merry-Go-Round Enters., Inc.), 180 F.3d 149 (4th Cir. 1999); Simon Props., L.P. v. Devan, 249 B.R. 269 (D. Md. 2000); In re Merry-Go-Round Enters., Inc., 244 B.R. 327 (Bankr. D. Md. 2000); In re Merry-Go-Round Enters., Inc., 241 B.R. 124 (Bankr. D. Md. 1999); Binswanger II, 231 B.R. 241; Devan v. CIT Group/Commercial Servs., Inc. (In re Merry-Go-Round Enters., Inc.), 229 B.R. 337 (Bankr. D. Md. 1999); In re Merry-Go-Round Enters., Inc., 227 B.R. 775 (Bankr. D. Md. 1998); Ernst & Young v. Devan (In re Merry-Go-Round Enters., Inc.), 222 B.R. 254 (Bankr. D. Md. 1998); Binswanger I, 218 B.R. 361; In re Merry-Go-Round Enters., Inc., 208 B.R. 637 (Bankr. D. Md. 1997); In re Merry-Go-Round Enters., Inc., 1996 WL 69688 (Bankr. D. Md. Jan. 23, 1996). The facts relevant to this appeal in particular are detailed here. To round out the story, the reader should consult the other opinions; familiarity with Binswanger I and Binswanger II is presumed. In late 1995, Binswanger first introduced the May Department Stores Company ("May") to the availability of a warehouse owned by MGRE. Pl.'s Exs. 1, 4, 5, 7, 8. Binswanger had done prior work for May, commonly referred to May as its "client," and had assigned a particular employee to keep in touch with May. Deposition Designation 1 at 31-32. In January 1996, agents of Binswanger showed agents of May around the warehouse, with the permission of agents of the debtor in possession. Pl.'s Exs. 13, 24. On February 1, 1996, the Baltimore Sun ran an article suggesting that the warehouse might be for sale. Def.'s Ex. 21. -2-

May sent its first offer on the property, dated February 27, 1996, to Binswanger. Binswanger Ex. 1; Pl.'s Exs. 50, 52, 53. May offered $15 million and required removal of certain equipment from the warehouse by the seller. At the time of this offer, Binswanger was negotiating with the debtor in possession for a written agency agreement, a negotiation that had begun before and continued until well after this offer. See Pl.'s Exs. 3, 11, 14, 17-20, 22, 29-33, 47. MGRE's board had directed the officers to pursue such an agreement, Pl.'s Ex. 23, and then delayed action to see what happened in bankruptcy court. Def.'s Ex. 27. Binswanger transmitted the first offer to MGRE on March 5, 1996. At the end of February, according to Tim Meyer, a vice-president of May who was involved with the purchase of the property throughout, May was not ready and willing to pay $19 million (the eventual purchase price) for the property. Deposition Designations 2A at 45-47. On March 1, 1996, the court converted the cases of the debtors in possession to Chapter 7. On that date, Binswanger had no written agency agreement with the debtors in possession. Pl.'s Ex. 59. Neither the debtor in possession nor the trustee, Deborah Hunt Devan, has ever applied for court approval to employ Binswanger under 11 U.S.C.

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Maryland Law