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Led-Mil of Nev. v. Skyland Realty and Insurance: Damages Arising Out of Oral Contract Upheld

In Led-Mil of Nevada, Inc. v. Skyland Realty and Insurance, Inc., the Supreme Court of Nevada addressed a broker's claims for breach of an oral promise and quantum meruit regarding sales and potential sales of land the broker subdivided for an owner. The court affirmed that the oral contract was not enforceable, and reversed a finding that the broker should be compensated for the value of his services.

Led-Mil of Nevada (Owner) owned property which it sought to subdivide and sell. In conjunction with this plan, Owner enlisted Skyland Realty and Insurance (Broker) to act as its broker. The parties orally agreed to an exclusive listing agreement under which Broker would receive commissions. The agreement covered the subdivision of the property as well as any future sales. After assisting in the subdivision of the property and the sale of several lots, Broker sued Owner to recover the commission on the completed sales and for the fair value (quantum meruit) of its services in connection with the subdivision.

The trial court dismissed Broker's first two claims (regarding breach of the oral contract), reasoning that Nevada law requires exclusive listing agreements to be in writing. However, after trial, the court awarded Broker over $24,000 for the value of services rendered during the subdivision of the property. Both sides appealed.

The Court noted the three claims alleged by Broker on appeal, each of which alleged that Broker expended approximately 1700 hours helping to subdivide the property based on Owner's continuing oral promises to allow Broker the exclusive right to sell the subdivided land as broker. The first claim asked for damages on land that Broker already sold, plus anticipatory damages for commissions on land yet unsold. The second claim sought commissions on land already sold, plus "specific performance" to allow Broker to act as broker for the unsold land. The third claim requested damages in quantum meruit for the reasonable value of Broker's work and services already performed.

The Court noted that Nevada Revised Statute 645.320 provides that to be enforceable, exclusive listing agreements must: (1) be in writing; (2) contain a definite, specified, and complete termination; (3) contain no provision requiring notification to the broker of the intention to cancel the exclusive features after the expiration date; and (4) be signed by both parties. The court noted case law interpreting this statute to require that every listing agreement be in writing (see Bangle v. Holland Realty Inv. Co., 80 Nev. 331, 393 P.2d 138 (1964)). Thus, the court affirmed the dismissal of Broker's first two claims regarding payment or specific performance for completed or potential sales.

Regarding the quantum meruit claim, the Court also referred to Bangle for its holding that a broker acting under an insufficient exclusive listing agreement cannot recover from an owner with whom he has allegedly contracted, either on the agreement, or in quantum meruit. The court also noted that Broker's attempted interpretation regarding quantum meruit recovery was inconsistent with NRS 645.320, as it would frustrate the legislative purpose of the statute. Thus, the court reversed the award of quantum meruit damages.

Led-Mil of Nevada, Inc. v. Skyland Realty and Insurance, Inc., 90 Nev. 72, 518 P.2d 606 (1974).