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In re Capitol Hill Group

June 20, 2006

IN RE: CAPITOL HILL GROUP, DEBTOR.


The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge

MEMORANDUM OPINION

This case comes on appeal from the United States Bankruptcy Court for the District of Columbia. Appellant is Newmark of Washington D.C., LLC, d/b/a/ Newmark & Bank Company (Newmark).*fn1

Appellee is Capitol Hill Group ("CHG"), a non-profit mutual benefit corporation that owned two parcels of real property when the events in question took place. This appeal challenges the bankruptcy court's decision that Newmark's claim to a commission from the appellee is barred by D.C. Code § 42-1705. That statute precludes real estate agents from collecting brokerage commissions in the absence of a written listing agreement. For the reasons discussed below, the Court affirms the decision of the bankruptcy court.

I. BACKGROUND

In January of 2000, the Holladay Corporation ("Holladay") made an offer to CHG to purchase two properties in Washington D.C., one located at 7th Street N.E. ("7th Street property") and one at 700 Constitution Avenue, N.E. ("Constitution Avenue property"). Dr. Shin, CHG's principal, employed Newmark to provide valuation services and assist CHG in maximizing its economic return of the properties. Newmark subsequently "helped research, review, and negotiate a contract dated March 24, 2000, in which Holladay agreed to purchase part of the Property." Bank Decl. at ¶ 7.

In a letter dated March 27, 2000 ("March 27 letter"), Newmark provided CHG with an overview of the agreement allegedly governing the relationship between the two companies. The letter sets forth terms and conditions under which it would "perform real estate brokerage and sales services" in connection with the sale of the Constitution Avenue property. The terms of the letter required CHG to pay an advance retainer of $1,500, and CHG would pay Newmark representatives their "current hourly rates" as specified. Fees would "generally be based upon the amount of time spent by [Newmark's] real estate professionals and support staff . . . and certain expenses incurred by [Newmark] that are allocable to that representation." In addition to the hourly fee, the letter stated that Newmark is entitled to a commission of 1% of the purchase price in the event the land was sold during the term of the agreement or to any purchaser who is identified within two years after the agreement's termination. The letter does not have a termination date, and it does not distinguish between services performed for the hourly rate and services performed for commission.

Finally, the letter specifies the manner in which CHG should consent to the agreement. "If the arrangements set forth are agreeable, please acknowledge your understanding thereof and agreement thereto by having the enclosed two (2) copies of this letter dated and executed in the space provided below and returning one executed copy thereof to us." Although CHG admits receiving the letter, CHG never signed or returned an executed copy to Newmark and no retainer was paid. Newmark claims, and CHG denies, that the March 27 letter memorialized a pre-existing oral agreement. CHG does admit an oral agreement to pay an hourly fee.

A second letter, dated September 29, 2000 ("September 29 letter"), purports to amend "the earlier consulting and commission agreement dated March 27, 2000, regarding the sale and development" of the property. This letter indicates that Newmark would be "advising [CHG] on the disposition of this property and will to [sic] provide unbiased, strategic advice as you continue to analyze your various options." According to Newmark, this letter memorializes an oral agreement that representatives of the parties reached during a round of golf. CHG denies the existence of that oral agreement, but it admits receiving the letter.

The September 29 letter provides that Newmark is to receive 1% commission on the 7th Street property and a 3% commission on the Constitution Avenue property, and it terminates the hourly free structure described in the March 27 letter. The September 29 letter contains instructions for executing the agreement identical to the March 27 letter. As in the case of the March 27 letter, CHG did not execute and return a copy of the letter as requested.

Between the letters, Newmark provided CHG with one invoice, dated April 6, 2000, for seven hours of service at a rate of $125 per hour. That invoice was paid on April 26, 2000. There were no further invoices sent and no further payments were made.

On December 8, 2000, Holladay and CHG entered into a purchase and sale agreement for both properties ("sales agreement"). The purchase and sale agreement contained a provision stating: "Seller [CHG] has used the services of the Bank Companies [Newmark's predecessor-in-interest] and Seller shall be solely responsible for paying the fees and commissions owed to the Bank Companies, pursuant to a separate written agreement." Newmark was not a party to those agreements.

The 7th Street property was sold pursuant to that agreement. The Constitution Avenue property was never sold, and Holladay and CHG do not intend to proceed with that sale. Newmark asserts a claim for commission on both properties.

II. STANDARD OF REVIEW

Newmark appeals the bankruptcy court's resolution of cross-motions for summary judgment. Because the bankruptcy court did not make findings resolving disputed facts, but instead ruled based on what it perceived to be undisputed material facts, the standard of appellate review ...


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