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REIMAN & CO. v. EROMANGA INVS.

January 11, 1985

REIMAN & COMPANY, Plaintiff,
v.
EROMANGA INVESTMENTS, N.V., Defendant


Oliver Gasch, United States District Judge.


The opinion of the court was delivered by: GASCH

This action was tried to the Court on September 26 and 27, 1984. Plaintiff and defendant waived a jury trial just prior to the start of the trial. The Court has considered the testimony and exhibits introduced in evidence during the trial as well as the memoranda submitted by the parties following the trial *fn1" and issues this memorandum setting forth its findings of fact and conclusions of law.

 Plaintiff Reiman & Company is a District of Columbia limited partnership. Richard Reiman, its sole general partner, is licensed as a real estate broker in the District of Columbia. Trial Transcript ("T."), testimony of Richard A. Reiman at 72, 73. Eromanga Investments, N.V. (hereinafter "Eromanga") is a Netherlands Antilles corporation named as a defendant individually and as the sole partner of defendant Connecticut Inn Partnership ("CIP"). *fn2" The Court has jurisdiction over the defendant pursuant to D.C. Code § 13-423(a)(1), (5). Subject matter jurisdiction exists pursuant to 28 U.S.C. § 1332.

 Plaintiff alleges that defendant Eromanga is liable for breach of a real estate commission agreement with regard to the Connecticut Inn Partnership's sale of the Connecticut Inn, a hotel located in Washington, D.C., to Van Ness Limited Partnership ("VNLP") *fn3" on November 1, 1983. Alternatively, plaintiff seeks compensation on a quantum meruit basis for services he alleges he performed in connection with this sale.

 Richard Reiman's interest in the sale of Connecticut Inn began in June, 1981 when he passed the hotel and noted a "for sale" sign on the premises. *fn4" T. at 73-74 (Reiman). Reiman was first authorized to act as a real estate broker on behalf of the Connecticut Inn Partnership with regard to this property in July, 1981. T. at 74-75 (Reiman) and 11-12 (testimony of Bruce D. Lyons). Reiman received this authorization from Bruce D. Lyons, President of Holland & Lyons Properties, *fn5" which at the time was the managing general partner responsible for the operation of the Connecticut Inn Partnership. *fn6" Lyons testified that he had agreed, on behalf of the Connecticut Inn Partnership, that Reiman was to receive a commission of $ 200,000 in cash at closing in the event of a sale of the Connecticut Inn "to anybody that Mr. Reiman was able to procure" or if Reiman & Company procured an acceptable joint venture partner to operate the hotel with the Connecticut Inn Partnership or any of its partners. T. at 12-13 (Lyons). *fn7" This commission agreement was not reduced to writing. *fn8" Id. at 14 (Lyons) and 123 (Reiman). Lyons testified that this basic agreement remained in effect at all times when the property was on the market through February 25, 1983, when Holland & Lyons Properties was removed as managing partner of the Connecticut Inn Partnership. T. at 15 (Lyons).

 The existence of such an oral commission agreement represented one of the most hotly disputed issues at trial. Counsel for Eromanga relied on a number of arguments in an attempt to undercut the testimony of Lyons and Reiman that they had entered into an oral agreement on behalf of their principals in July 1981. For example, defendant relies on the existence of other written agreements between the parties regarding other prospective purchases of the Connecticut Inn as well as Reiman's own statements concerning the value of written agreements to support its contention that no oral agreement existed. In addition, defendant attempted to discredit Lyons' testimony that he entered into an agreement with Reiman by arguing that Lyons was not a disinterested witness since Lyons admitted that he expected to receive a portion of the proceeds of plaintiff's recovery in this litigation *fn9" and Reiman characterized Lyons as a "friendly acquaintance" of his. T. at 131 (Reiman).

 The decision as to whether or not to accept the testimony of Lyons and Reiman on the existence of an oral commission agreement ultimately requires the Court as the finder of fact in this action to assess the credibility of these witnesses. *fn10" Of course, as counsel for defendant points out, the existence of a pecuniary interest is one factor that may indicate that a witness' testimony should not be credited by the finder of fact. Similarly, in some cases it is appropriate to draw inferences regarding the claim of reliance on an oral agreement where the parties have seen fit to reduce other agreements to writing. However, a determination as to the credibility of a witness is not a mechanical inquiry in which his sworn statements must always be disregarded in the presence of such factors. Rather it requires consideration of a wide variety of indicia of credibility including the demeanor of the witness, the extent to which a witness' testimony is consistent with the other evidence in the case, and the existence of evidence which rebuts that evidence offered to impeach a witness. *fn11" After consideration of all these indicia of credibility and the evidence as a whole, the Court finds the testimony of Lyons and Reiman as to their having entered into an oral commission agreement entitling Reiman & Company to a $ 200,000 fee if it procured a buyer or joint venture partner for the Connecticut Inn to be credible. The Court finds its own observations as to the demeanor of Lyons and Reiman to be especially persuasive in making this determination. *fn12"

 Between July 1981 and February 1983, Reiman engaged in extensive efforts to find a purchaser for the Connecticut Inn. On two occasions he was successful in securing contracts from prospective buyers but in neither case did the deal close. *fn13" During periods when the hotel was not taken off the market in ultimately futile efforts to close these two deals, plaintiff attempted to interest the Coakley & Williams group in acquiring the Connecticut Inn. It is the extent and significance of those efforts directed at Coakley & Williams that was the second hotly disputed issue at trial.

 Reiman first contacted Coakley & Williams with regard to the Connecticut Inn in August, 1981 when he telephoned Fred Williams, president of Coakley & Williams. T. at 76-77 (Reiman) and 157-59 (Williams). This contact represents the first time that Coakley & Williams became aware that the Connecticut Inn was for sale. T. at 157 (Williams). Immediately after that call, Reiman met with Brian Coakley, then manager of Coakley & Williams' hotel division or vice president of marketing, on August 19, 1981 to provide Coakley & Williams with further information on the hotel. T. at 77-78 (Reiman) and 180-81 (Brian Coakley). *fn14" At that time, Reiman presented Coakley & Williams with a detailed investment brochure which included a description of the property, floor maps, estimates as to the cost of required renovation work, and location maps detailing offices and other facilities in the area. See T. at 78-80 (Reiman) and 182 (Brian Coakley); see also Plaintiff's Exhibit No. 5. Brian Coakley promised to relay the information Reiman had provided to Fred Williams. T. at 184 (Brian Coakley).

 On September 2, 1981, Reiman met with Fred Williams and took him on a thorough inspection of the hotel. T. at 81-82 (Reiman) and 157 (Williams). *fn15" This tour represented the first time that representatives of the Coakley & Williams group saw the Connecticut Inn. T. at 157 (Williams).

 Reiman followed up on the September 2, 1981 meeting by sending a letter encouraging Coakley & Williams to submit a contract. See T. at 82-83, Plaintiff's Exhibit No. 4. Reiman also made several calls to Fred Williams to push the project. T. at 158-59 (Williams). Later that month, Reiman returned to Coakley & Williams and met with Fred Williams a second time, this time giving him a memorandum responding to certain questions about the project he had been unable to answer earlier. See T. at 87-88 (Reiman), Plaintiff's Exhibit No. 6. That same month Reiman met with Williams a third time to give Williams a contract. T. at 88-89 (Reiman). During the latter part of September, Reiman met with Williams at the Connecticut Inn and this time Neil Coakley was present. T. at 90 (Reiman). This visit represented the first time Neil Coakley had seen the Connecticut Inn. Id. As part of this meeting, Reiman drove Neil Coakley and Fred Williams around the area surrounding the hotel, pointing out features of the area that might represent sources of business for the hotel. Id. at 91.

 Despite his efforts, Coakley & Williams did not submit a contract prior to the Connecticut Inn Partnership's receipt of the JNC offer in October, 1981. Instead, in early October, Reiman received a letter from Brian Coakley informing him that because of other "projects and commitments" then underway, Coakley & Williams was unable to "devote the time and study necessary" to consider the matter further at that time. However, Coakley's letter also advised Reiman that Coakley expected to pursue the matter further as soon as the firm's work load had lessened. Coakley reassured Reiman to "rest assured that when that time is available, I will call you. . . ." Plaintiff's Exhibit No. 8, Defendant's Exhibit R; see also T. at 95-96. *fn16"

 Following the failure of the JNC Enterprises deal, the Connecticut Inn was again placed on the market. *fn17" Reiman again set out to interest Coakley & Williams in the Connecticut Inn. T. at 32-33 (Lyons) and 99 (Reiman). Reiman again wrote Brian Coakley and repeatedly attempted to call Fred Williams about the hotel. T. at 99-101 (Reiman), Plaintiff's Exhibit No. 11. Reiman stressed that the Connecticut Inn Partnership's asking price had already fallen considerably below the $ 5 million Reiman had told Coakley & Williams that CIP was seeking in 1981. Id. Reiman was again told that the Coakley & Williams firm was "extraordinarily busy" and therefore could not consider the matter at that time. T. at 101 (Reiman). Reiman made one final effort to interest Coakley & Williams by phone in July of 1982 just before International Hotel Group submitted a contract but was again told that the press of other business made it impossible for Coakley & Williams to devote the time needed to consider the matter. T. at 105-06 (Reiman).

 Following the failure of the IHG deal, the Connecticut Inn was placed back on the market a final time. Reiman testified that he wrote Brian Coakley a letter on January 19, 1983 in a renewed effort to spark Coakley & Williams' interest in the Connecticut Inn. T. at 108-09 (Reiman), Plaintiff's Exhibit No. 22. *fn18" Reiman also testified that he called a Coakley & Williams official *fn19" to follow up on the letter. T. at 110-11 (Reiman). Reiman's January call to Coakley & Williams apparently marked the end of his role in efforts to interest Coakley & Williams in the property. On February 22, 1983, Eromanga wrote Reiman to notify him that Reiman & Company's authority to serve as a broker for the Connecticut Inn Partnership had been terminated. See T. at 171-72 (Precup) and Plaintiff's Exhibit No. 44. Eromanga apparently took this action to revoke Reiman's authority in anticipation of its decision to exercise its buy-out rights and become managing general partner of the Connecticut Inn Partnership as of February 25, 1983. Eromanga barred Reiman & Company from playing any role in subsequent negotiations with Coakley & Williams. T. at 261-62 (Precup). All remaining contacts between the Connecticut Inn Partnership and the ...


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