Preview:

REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 707 September Term, 2008

WILKENS SQUARE, LLLP, ET AL. v. W. C. PINKARD & CO., INC. T/A COLLIERS PINKARD

Eyler, Deborah S., Graeff, Kehoe, JJ.

Opinion by Eyler, Deborah S., J.

Filed: November 30, 2009

In the Circuit Court for Baltimore City, W.C. Pinkard & Co., Inc. ("Colliers Pinkard"), the appellee, sued Wilkens Square, LLLP, and Stone Associates, Inc. (together "Wilkens"), the appellants, for breach of contract, to recover an unpaid broker's fee in connection with the sale of an office building by Wilkens to Charles M cCann Investments ("CM C"). Wilkens counterclaimed against Colliers Pinkard on several legal theories. The case was tried to a jury, which found in favor of Colliers Pinkard on the breach of contract claim, awarding it $226,321.67 in damages, and found against W ilkens on its counterclaims. On appeal, Wilkens poses several questions for review, which we have consolidated and rephrased as follows: I. Did the trial court err by not ruling, as a matter of law, that Colliers Pinkard was in a dual agency with Wilkens and CMC during times relevant to this case? Did the trial court err by not ruling, as a matter of law, that Colliers Pinkard's relationship with CMC was a material fact that Colliers Pinkard had a duty to disclose to Wilkens at the outset of their business relationship? Did the trial court err by not giving requested jury instructions and by giving the jury a special verdict sheet that was incorrect? 1

II.

III.

1

Wilkens framed its questions presented as follows: From 2004 until at least the end of 2005, Colliers Pinkard acted as a paid buyer's agent for a company interested in purchasing office buildings in Baltimore. Prior to the expiration of that agreement, Colliers Pinkard entered into an agreement to act as a seller's agent to sell Wilkens Square's Baltimore office building. Did the six-week period in which those agreements overlapped constitute a dual agency as a matter of law? (continued...)

1.

For the following reasons, we shall affirm the judgment entered on the jury's verdict.

FACTS AND PROCEEDINGS
Because two of the issues presented raise, in effect, legal sufficiency questions, we shall summarize the facts adduced at trial in the light most favorable to Colliers Pinkard, as the prevailing party below. To the extent the third issue requires us to view any of the facts through a different lens, we shall do so in our discussion of that issue. The business entities and their representatives were, at the relevant times, as follows. Colliers Pinkard is a commercial real estate broker in Baltimore City. Ordinarily, it

1

(...continued) 2. If the answer to Question 1 is "no," does the answer change as a result of any of the following facts? a. At the time Colliers Pinkard entered into the agreement to sell the building for its second principal (Wilkens Square), it intended to actively market the property to its first principal, which subsequently confirmed in writing that it had an "active interest in pursuing" the property; b. The commission, if any, that the first principal was obligated to pay was contingent on the amount of the commission to be paid by the second principal; and c. All of this occurred without the knowledge of the second principal. 3. Whether or not characterized as a "dual agency," was the existence and terms of Colliers Pinkard's relationship with its first principal material information that Colliers Pinkard, as a fiduciary, had a duty as a matter of law to disclose to its second principal at the commencement of their relationship? 4. Did the trial court improperly limit the jury's consideration of the issues by referring in the jury instructions and verdict sheet only to the duty to disclose a dual agency and not the duty to timely disclose all material information? 2

represents sellers of commercial properties. The Colliers Pinkard principals primarily involved in the transactions at issue here were Philip Iglehart and Dennis Malone. CMC is an investment company, based in Ireland, that in 2004 began looking to purchase commercial property in the Baltimore City/Washington, D.C. area. Its local representative and lawyer is Patrick Donnelly. Wilkens and its principal, Daniel Stone, were members of a limited partnership that owned 300 W. Pratt Street, an office building in Baltimore City ("the Pratt Street Property" or "the Property"). In early 2005, Colliers Pinkard and CMC entered into a Brokerage Agreement for Colliers Pinkard to represent CMC's interests in the purchase of commercial property in the Baltimore City/Washington, D.C. area. Under the Brokerage Agreement, CMC paid Colliers Pinkard a monthly fee (at first, $2,500, and later, $5,000) to identify potential investment properties in the $20 million dollar and above price range. According to the involved principals of Colliers Pinkard and CMC, the Brokerage Agreement applied only to potential investment properties for which Colliers Pinkard was not the listing agent. The Brokerage Agreement provided that, in addition to the monthly retainer, CMC would pay Colliers Pinkard a commission on any sale to CMC that resulted from Colliers Pinkard's efforts. The agreement further provided that, for any given sale, if Colliers Pinkard were able to persuade the property seller to pay the commission in an amount equal to or greater than "the suggested CMC discounted fee," Colliers Pinkard would "not seek remuneration from CMC." In other words, if Colliers Pinkard could obtain its commission

3

(or more) from the seller of commercial property to CMC, CM C would not be obligated to pay a commission to Colliers Pinkard. By August 2005, the business relationship between Colliers Pinkard and CMC had not proven fruitful and the entities decided to bring it to an end. They agreed that the Brokerage Agreement would remain in effect until the end of 2005, during which time CM C would continue paying Colliers Pinkard the monthly fee; and then the Brokerage Agreement would expire. Indeed, that is what happened, and the Brokerage Agreement came to an end as of December 31, 2005. In the meantime, Wilkens, through Stone, decided to put the Pratt Street Property up for sale. After a few months of marketing the Property on his own, without success, Stone approached Colliers Pinkard about serving as Wilkens's broker in the sale of the Property. Colliers Pinkard agreed and, on November 18, 2005, the entities entered into a Listing Agreement for the sale of the Property. In early December 2005, representatives of CMC traveled to the United States to inspect potential commercial investment properties. On December 7, 2005, the CMC representatives met with Iglehart and Malone of Colliers Pinkard to view a number of properties in the Baltimore area. The Pratt Street Property was not one of them. At one point during the visit, Colliers Pinkard representatives told the CM C representatives they might want to look at the Pratt Street Property, even though it was priced below their target value for potential investment properties. The CMC representatives then visited the Property, but

4

not in the company of anyone from Colliers Pinkard. Thereafter, the CMC representatives informed the Colliers Pinkard representatives, by e-mail, that they would be interested in receiving additional information about the Property. The Pratt Street Property was to be sold by means of a "controlled auction," which is a common practice in commercial real estate sales. As Wilkens's broker under the Listing Agreement, Colliers Pinkard made the arrangements for the auction. It prepared an

Executive Summary for the Property, from which potential buyers would learn basic relevant information. That summary was publicly distributed on December 15, 2006. If a potential buyer expressed interest in the Property, Colliers Pinkard would send it a confidentiality agreement to execute. It was Colliers Pinkard's practice that, upon receipt of a signed confidentiality agreement from a potential buyer, it would send the potential buyer an Offering M emorandum, which was a detailed disclosure about the Property. Because the CMC representatives had expressed interest in the Pratt Street Property, Colliers Pinkard added CM C to the list of potential buyers for the Property and sent it a copy of the Executive Summary. In early January 2006, after the Executive Summary had been mailed out to all potential buyers, Colliers Pinkard began contacting the various entities that had responded to the mailing to obtain signed confidentiality agreements before mailing the Offering Memorandum. On January 18, 2006, CMC executed a confidentiality agreement, which Colliers Pinkard received. Soon thereafter, CMC was mailed the Offering

Memorandum. CMC was one of 48 entities to receive the Offering Memorandum.

5

The first round of bids on the Pratt Street Property took place on February 3, 2006. CM C was one of five bidders, and its bid of $12.5 million was the second highest. On February 6, 2006, Malone of Colliers Pinkard met with Stone of Wilkens to discuss the bids that had come in from each potential buyer. At that meeting, in response to an inquiry, Malone told Stone about the Brokerage Agreement between Colliers Pinkard and CMC. Specifically, Malone explained that Colliers Pinkard had contracted with CM C to help it locate potential investment properties to purchase, and that the contract had expired as of the end of 2005. Stone memorialized that conversation in a note to himself, in which he also wrote that Wilkens should proceed with the second round of bidding, "get [the] CMC final proposal," and then inquire more about the business relationship between CMC and Colliers Pinkard. He further noted that if, at that time, he thought the prior contract between CMC and Colliers Pinkard posed a problem, he would have to decide whether to go forward with a sale to CMC or to go forward with a sale to another bidder; and if he thought there was no problem, he would "proceed." The second round of bidding was held on February 23, 2006. The bids were

submitted on invitation by Wilkens, through Colliers Pinkard, as its broker. Invitations were extended only to three entities, one of which was CMC. Stone's decision to include CMC as one of the second round bidders was made after the February 6, 2006 meeting. As it turned out, one of the three invited bidders dropped out before the second bidding round, leaving only two entities (including CMC) to participate in that round. Both participants

6

submitted increased bid amounts. CMC's bid, for $13,175,000, was the high bid, by $725,000. In late February 2006, after the second round bids were received, Stone instructed Colliers Pinkard that, from that point on, he would handle the negotiations with CMC on his own. On March 1, 2007, Stone met with representatives of CMC and tried to persuade them to increase their bid. They refused and the sales price remained $13,175,000. Stone informed representatives of CMC that, before a sales contract would be executed, he wanted to see a copy of the Brokerage Agreement between Colliers Pinkard and CMC. He also asked CMC to pay Colliers Pinkard's commission. CMC refused to pay the commission, on the ground that Colliers Pinkard had not acted and was not acting as its broker in the transaction in question (i.e., the sale of the Pratt Street Property); to the contrary, Colliers Pinkard was acting as Wilkens's broker in that transaction. CMC representatives confirmed for Stone that its Brokerage Agreement with Colliers Pinkard had expired on December 31, 2005. On April 27, 2006, CMC e-mailed Stone a copy of the expired Brokerage Agreement. The final contract of sale for the Property by Wilkens to CMC was executed the next day. Stone had read the Brokerage Agreement before then. On May 24, 2006, in anticipation of the settlement on the sale of the Pratt Street Property, Colliers Pinkard sent Wilkens an invoice for $226,321.67, its commission as

7

calculated under the terms of the Listing Agreement. Closing took place on June 14, 2006.2 Thereafter, Wilkens failed to pay Colliers Pinkard's commission, notwithstanding demand. On July 3, 2006, in the Circuit Court for Baltimore City, Colliers Pinkard filed a onecount breach of contract action against Wilkens, seeking payment of its commission. Wilkens filed a counterclaim for breach of contract and negligence. It later amended its counterclaim to add claims for intentional concealment of material facts and conspiracy by a fiduciary. The case was tried to a jury from October 24, 2007, to November 2, 2007. It was submitted to the jury for decision by way of a special verdict sheet. The jurors returned their verdict, finding 1) that Colliers Pinkard proved by a preponderance of the evidence that Wilkens had breached the Listing Agreement by failing to pay the commission; 2) that Wilkens had not proved "by a preponderance of the evidence that Colliers Pinkard engaged in a dual agency by representing both [Wilkens and CMC in the sale of the Property]"; and 3) that Colliers Pinkard was entitled to $226,321.67 in damages for the breach of contract. The jurors returned verdicts against Wilkens on each of its counterclaims, determining that Colliers Pinkard did not breach its duties to Wilkens arising out of the Listing Agreement by failing to properly market the Property or to properly support its underwriting assumptions;

At the relevant times, the 300 West Pratt Street Limited Partnership owned the Property. When the Property was sold, CM C purchased it by buying the partnership interests in the limited partnership. 8

2

that Colliers Pinkard did not breach a fiduciary duty to Wilkens; and that Colliers Pinkard did not enter into a conspiracy with CMC. The court entered judgment on the jury verdict. Wilkens filed a timely motion for judgment notwithstanding the verdict or for new trial, which was denied. This appeal followed. We shall include additional facts as pertinent to our discussion of the issues.

DISCUSSION
I. Wilkens's Affirmative Defense of Dual Agency At trial, Wilkens did not contest Colliers Pinkard's evidence on its claim for breach of the Listing Agreement. Rather, Wilkens raised the affirmative defense of dual agency. It sought to prove that Colliers Pinkard acted as a real estate broker for it (Wilkens) and as a real estate consultant for CMC and therefore, under Maryland law, and also under a term peculiar to the Brokerage Agreement, Colliers Pinkard forfeited its contractual right to a broker's fee under the Listing Agreement. At the close of all the evidence, Wilkens moved for judgment on that ground. The court denied the motion. Wilkens challenges that ruling on appeal. It acknowledges that it bore the burden of proving dual agency. It argues that it not only met its burden, it adduced such powerful evidence as to compel a finding, as a matter of law, that Colliers Pinkard was in a dual agency relationship with it and with CMC from November 18, 2005, until December 31,

9

2005. For that reason, the court should have ruled that Colliers Pinkard forfeited its contractual right to a broker's commission on the sale of the Pratt Street Property, and not submitted that issue to the jury for decision. In essence, Wilkens maintains that, on the evidence about dual agency and the reasonable inferences it supported, reasoning minds only could find that Colliers Pinkard occupied a prohibited dual agency role vis

Download Wilkens Square v. W.C. Pinkard.pdf

Maryland Law