Florida’s highest court has considered whether broker could recover commission under an oral brokerage agreement from a voluntary condemnation of client’s property which broker helped to negotiate.
St. Joe Corporation (“Owner”) owned a 600 parcel of environmentally sensitive land that the Owner decided to sell to the State of Florida (“State”). The Owner had previously worked with real estate broker H. Bruce McIver (“Broker”). In the past, the parties had worked under a handshake arrangement and, once again, the Owner agreed to pay the Broker a commission for the sale of the Owner’s land under an oral contract.
The negotiations between the parties occurred over the course of several years, as the State had to place the land on a list of environmentally sensitive properties it would like to acquire, with the State purchasing the properties which were highest on the list and where an acceptable price could be negotiated. In 1994, the Owner’s land had reached the top of the State’s list but the parties were unable to reach an acceptable price, due to limitations in the amount the State could bid due to the way the property was zoned.
At this point, the Broker claims that he suggested to the Owner that they allow the State to condemn the property, which would allow the State to offer more for the property than the State was currently offering. Allegedly, the Owner approved the Broker having such discussions with the State. The State would only condemn properties on the environmentally sensitive list if the Owner agreed to the condemnation. In 1994, the Owner agreed to allow the State to condemn the property, and the parties negotiated a purchase price acceptable to both parties. While the condemnation proceedings were underway, a representative of the Owner told the Broker that he would only receive a commission if the property was sold, not if it was condemned. Following that conversation, the Broker did not have a role in negotiating the sales price for the property.
Following the sale of the property, the Broker filed a lawsuit seeking payment of his commission. The trial court dismissed, the Broker’s lawsuit based on an earlier Florida case which set forth the rule that condemnation proceedings could never serve as the basis for a brokerage commission. The appellate court reversed, finding that in some instances, a broker could collect a commission from condemnation proceedings. The Owner appealed to Florida’s highest court.
The Supreme Court of Florida affirmed the appellate court’s reversal of the trial court, although on different grounds, and sent the case back to the trial court for further proceedings. Looking at the law in this area, the court found the general rule was that a broker could not collect a commission for an unexpected condemnation proceeding because the owner had no control over the proceedings, as the owner had to either accept the offered price or litigate over the amount of “just compensation” that the government should pay for the condemnation.
However, the court stated that the facts here presented a different scenario, as the Owner had voluntarily entered into the condemnation proceedings with the State. Since the condemnation proceeding was voluntary, the court ruled that the general rule of denying a brokerage commission from condemnation proceedings did not apply. Instead, the court stated that general contract principles should determine whether Broker was entitled to receive a commission.
In Florida, oral brokerage contracts are valid and enforceable and so the trial court needed to determine whether the parties had a contractual agreement. The issues for the trial court to resolve are whether the agreement between the Owner and the Broker only covered a sale and not a condemnation, and also whether the Owner modified oral contract during the course of the dealings between the Broker and the State. The court stated that if it was true that the Owner directed the Broker to pursue the condemnation with the State, then the oral contract may very well have been modified to include payment of a commission for a condemnation as well as a sale. But this was a factual issue for the trial court to resolve, and so the court sent the case back to the trial court to conduct further proceedings.
St. Joe Corp. v. McIver, No. SC02-2491, 2004 WL 212453 (Fla. Feb. 5, 2004). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].