The opinion of the court was delivered by: GREEN
JOYCE HENS GREEN, United States District Judge.
Defendant Unicorp American Corporation moves this Court for summary judgment on the grounds that the contract plaintiff seeks to enforce is void as against public policy. For the reasons set forth below, the Court finds it must grant defendant's motion.
In this action, plaintiff seeks to recover a commission of $125,000 allegedly due and owing under a contract he entered into with REIT of America, Inc. Plaintiff and REIT executed a "Consulting Agreement" in which plaintiff undertook the renegotiation of a lease of real property on behalf of REIT, the owner, in exchange for a fee. The agreement provided that payment of the fee was contingent upon the owner's acceptance of any lease negotiated by plaintiff, such acceptance to be evidenced by the owner's execution of the lease. After acquiring the property from REIT, defendant Unicorp executed such a lease with the tenant, the General Services Administration (GSA). Plaintiff claims defendant received the benefit of his services and, having assumed REIT's obligations, is liable to him for the commission.
In moving for summary judgment, defendant directs the Court's attention to paragraph 19 of the Supplemental Lease Agreement, which provides:
Paragraph 19 simply parrots the language of 41 U.S.C. § 254(a) and the implementing provisions of the Federal Procurement Regulations, 41 C.F.R. § 1-1.500 et seq., which proscribe "influence peddling" in government contracts. Defendant argues that the agreement plaintiff seeks to enforce violates this prohibition, since plaintiff was retained on a contingency basis to secure a new lease with GSA, a government agency. Plaintiff argues in response that section 254(a) and its implementing regulations are not applicable to this case and that, even if they were, a question of material fact exists as to whether he falls within the exceptions created by the section.
In urging that the statute does not govern this case, plaintiff relies on Vander Zee v. Karabatsos, 191 U.S. App. D.C. 200, 589 F.2d 723 (D.C. Cir. 1978). In that case, Savage/Fogarty Company, the owner of certain property, contacted appellant and asked if he could assist in the renegotiation of a lease held by GSA. Vander Zee declined, but offered to refer someone who could. He eventually settled on appellee Karabatsos, who agreed to undertake the renegotiation. According to Vander Zee, the two men orally agreed that Vander Zee would receive one-third of all fees eventually earned by Karabatsos. The district court overturned a jury verdict in favor of Vander Zee, in part because it believed the contract was unenforceable under section 254(a). The Court of Appeals, however, reversed, noting that there was no contingent fee arrangement between the property owner, Savage/Fogarty, and Karabatsos, and that any contract between Vander Zee and Karahatsos was irrelevant to the statute. The Court stated
[section 254(a)] prohibits a contractor such as Savage/Fogarty from employing someone to solicit or secure a government contract on a contingent fee basis. In the present case, however, Savage/Fogarty entered no contingent fee arrangement with any party in an attempt to procure the GSA leasing contract. Their ownership of the Rosslyn office building put them in a direct negotiating position with the GSA. The contingent fee arrangement between Karabatsos and Vander Zee thus was unrelated to the procurement of a government contract.
Id. at 727 n.4 (emphasis supplied).
Plaintiff apparently finds in this passage, and in particular the underscored sentence, a ruling that because Savage/Fogarty simply sought to renegotiate an existing lease, the person it employed for this purpose was not engaged in "securing" a government contract on a contingent fee basis. The Court cannot agree. Vander Zee simply stands for the proposition that a contingent fee contract between a real estate agent and a third person not a party to the government contract does not fall within section 254(a)'s reach. Nowhere does the Vander Zee court suggest that a contingent fee contract to obtain a lease with the government is enforceable because the lease is secured through renegotiation. Nor does it suggest that the process of renegotiating somehow renders a contingent fee arrangement non-contingent. The Court explicitly stated that "Savage/Fogarty entered no contingent fee arrangement with any party. . . ." The appellate court did not explain exactly what type of arrangement Savage/Fogarty actually had with Karabatsos, but this Court does not read the underscored sentence above to mean that simply because the company owned the property to be leased, it could not have employed Karabatsos on a contingent basis.
In the present case the facts are undisputed that plaintiff was hired to secure, through renegotiation, a new lease with the government, and that his commission was contingent on his negotiating a lease acceptable to the owner. Such contracts are contrary to federal policy and are therefore unenforceable. Quinn v. Gulf & Western Corp., 644 F.2d 89, 93 (2d Cir. 1981). This is so even though the government contractor has benefited from the illegal contract;
indeed, courts have refused to permit recovery on a quantum meruit basis.
LeJohn Mfg. Co. v. Webb, 95 U.S. App. D.C. 358, 222 F.2d 48, 52 (D.C. Cir. 1955).
Plaintiff next contends that he has alleged facts sufficient to raise a material question as to whether he falls within one of the two exceptions to the statute. He relies principally on the fact that the Consulting Agreement narrowly circumscribed his authority to negotiate the lease, vesting total discretion in the property owner to determine "all terms and conditions of the Lease," DX 1 at 2; and on his expectation that his relationship with REIT would be a continuing one. Affidavit of Roy Markon at 2, attached to Plaintiff's Supplemental Opposition to Defendant's Motion for Summary Judgment. Plaintiff's expectation of a continuing relationship with REIT, which he based on his perceptions of the company's needs as well as conversations he had with REIT's former president, is contradicted by the agreement itself, however, which was limited to 240 days "unless extended by mutual agreement . . . for additional term(s) of ninety days each." DX 1 at 2. The contract, therefore, contemplated only a short-term relationship based on a single lease renegotiation. Moreover, the contract expressly stated that the property owner granted plaintiff an "exclusive revocable right to negotiate with GSA regarding the terms of a Lease as representative, but not as employee of, Owner." Id. (emphasis supplied).
In addition, the contract provided that plaintiff would bear his own expenses in preparing a lease and any other supporting documents and that he would indemnify the owner for any negligence or willful misconduct in the performance of his contractual duties. Thus, not only does the contract's duration belie plaintiff's claim of an employer-employee relationship, its substantive terms demonstrate that no such relationship was intended or created. The fact that plaintiff was not given authority to execute any lease or other tenancy agreement does not alter that fact; indeed, such limited authority is only natural in a contract that made plaintiff's receipt of his commission contingent upon the owner's acceptance of the lease.
This case is a far cry from Companhia Atlantica De Desenvolvimento E Exploracao v. United States, 148 Ct. Cl. 71, 180 F. Supp. 342 (1960), the sole authority cited by plaintiff in advancing his claim of a bona fide employee relationship. There, the plaintiff signed an agreement with two persons, Westbrook and Pulverman, under which the two were appointed exclusive sales agents in certain countries for a period of five years. The Court found that such exclusive agencies, for such a substantial period of time, and in the only countries in which there was any prospect of obtaining the necessary contracts, rendered the two men employees of the plaintiff for purposes of the statute barring ...