In Edmund J. Flynn Co. v. LaVay, the District of Columbia Court of Appeals addressed a broker's claim of breach of contract against a developer. The court affirmed that no express contract existed but that, under express and implied-in-fact agency principles, the broker was due compensation for the value of his pre-sale marketing activities.
LaVay owned LaVay Corporation (LVC), a real estate development company that planned to develop a condominium to be called Park Place. LaVay met with Flynn (Broker) to discuss the prospect of Broker becoming sales agent for the project. During this meeting, the parties concluded no agreement and executed no writings. LaVay subsequently invited Broker to participate in other meetings related to the sale of units. While the parties originally intended that Broker act as the commissioned sales agent for the development, disagreement on material terms prevented a written contract from being formed. However, during the course of these negotiations, Broker continued to attend LVC meetings and was provided with a written agreement appointing him agent for the limited purpose of responding to initial inquiries from prospective buyers. This written agreement explicitly stated that no agreement authorizing Broker to act as a commissioned sales agent had been reached.
After Broker failed to be appointed sales agent, he sued LaVay and LVC for breach of contract. The trial court found no express contract which entitled Broker to commissions, but held that Broker did act as a pre-marketing agent due to implied-in-fact agreement and the express limited agency agreement. The court awarded Broker $18,000 for the value of his services. Both sides appealed.
Regarding the breach of contract claim, the Court stated that "to be final, contract negotiations must include all of the terms which the parties intended to resolve; material items cannot be left to future settlement." The court noted that both parties agreed that no formal sales commission agreement was signed and, in fact, had stated in the limited agency agreement that no other agreement had been reached. The court also noted that in evaluating contract formation, it examines the parties' intention to be bound. The court found that under the circumstances, there was no meeting of the minds and no intent to form a contract. Thus, the court affirmed that there was no contract to be breached.
Regarding the agency findings, the Court noted that a broker alleging such a relationship must show that the purported principal authorized the broker to act as its agent. Absent such authorization, a broker is a mere volunteer who is not entitled to commissions or fees. The court of appeals affirmed that the Broker had carried his burden of proving the existence of an agency relationship.
Regarding damages, the Court noted that "an agent acting pursuant to an express appointment may recover the fair . . . value of services rendered, even absent an explicit compensation agreement." The court found that the express pre-marketing agreement created an agency relationship justifying damages. Regarding the implied-in-fact agreement, the court noted that a party must show: (1) the services were carried out in such a way that the recipient knew that the services were rendered for him and not some other person; (2) the recipient was on notice that the services were not rendered gratuitously; and (3) the services were beneficial to the recipient. The court held that Broker's substantial attendance at meetings and his pre-marketing activities satisfied the implied-in-fact agreement requirements. The court affirmed the fair value of Broker's services was $18,000. While the court affirmed the major issues of the case, it remanded an issue involving an evidentiary ruling.
Edmund J. Flynn Co. v. LaVay, 431 A.2d 543 (D.C. 1981).