Case Title: GSHH-Richmond Inc. v. Imperial Associates

Citation: 

Docket Number: 

State: virginia

Court: Virginia Supreme Court

Date: 1997-01-10T00:00:00Z

Document:
Present:  All the Justices 
 
GSHH-RICHMOND, INC. 
 
v.  Record No. 960493 
OPINION BY JUSTICE BARBARA MILANO KEENAN 
                                   January 10, 1997 
IMPERIAL ASSOCIATES 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 
 
Theodore J. Markow, Judge 
 
 
In this appeal, we consider whether a lease provided 
adequate consideration for the lessor's promise to pay a sales 
commission to the leasing agent if the lessee later purchased the 
property. 
 
GSHH-Richmond, Inc. is the successor in interest to Virginia 
Realty and Development Company (collectively, Virginia Realty), a 
party to the disputed contracts in this case.  Virginia Realty 
sells and leases commercial real estate on behalf of its clients. 
 
Imperial Associates is a general partnership which owned the 
Imperial Building in the City of Richmond.  In September 1993, 
Virginia Realty entered into a "Sales and Leasing Agreement" (the 
listing agreement), in which the "Owner" employed the "Agent," 
Virginia Realty, to procure a lease for the Imperial Building.  
The Owner agreed to pay Virginia Realty a six percent commission 
"on all leases originated by the Agent," and reserved the option 
to pay the balance of any lease commission due the Agent in the 
event of a sale. 
 
In December 1993, Imperial Associates and Kaestner and 
Associates, a sole proprietorship, entered into a lease 
negotiated by Virginia Realty.  The lease provided Virginia 
Realty a commission of six percent of the rental income received 
 
 
 
 
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by Imperial Associates.  The lease also specified that Virginia 
Realty would receive a sales commission of six percent of the 
purchase price, in addition to the rental commission, if Kaestner 
and Associates, its successors, or assigns purchased the 
building.  The lease stipulated that the sales commission was 
provided "in consideration of Agent's consummating this lease." 
 
Virginia Realty received its rental commissions pursuant to 
the lease from March through December 1994.  During the summer of 
1994, Imperial Associates advised Virginia Realty that it was 
interested in selling the Imperial Building to Kaestner and 
Associates.   
 
In October 1994, Imperial Associates entered into a purchase 
agreement with Four Twenty Two Corporation, a corporation whose 
sole shareholder, officer, and director is Joseph W. Kaestner.  
In January 1995, Imperial Associates sold all its rights in the 
Imperial Building to Four Twenty Two Corporation for $1,550,000. 
Virginia Realty was not paid a sales commission on this 
transaction. 
 
Virginia Realty filed a motion for judgment against Imperial 
Associates alleging that, under the lease, Imperial Associates 
owed Virginia Realty a $93,000 commission for the sale of the 
Imperial Building.  Imperial Associates filed a motion for 
summary judgment on this issue, arguing that there was no 
additional consideration in the lease for the sales commission.  
Imperial Associates contended that Virginia Realty's services in 
 
 
 
 
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consummating the lease were no different from the 
responsibilities Virginia Realty had undertaken in the listing 
agreement. 
 
The trial court granted summary judgment to Imperial 
Associates on this issue.  The court concluded that Virginia 
Realty had provided no additional consideration for Imperial 
Associates' agreement to pay the sales commission. 
 
On appeal, Virginia Realty argues that, in return for the 
sales commission, it rendered services in "consummating the 
lease" which included negotiation of the lease and advice 
provided during that process.  Virginia Realty asserts that these 
services were distinct from, and in addition to, the services it 
was required to provide in "originating the lease." 
 
In response, Imperial Associates contends that the listing 
agreement provided the entire compensation due Virginia Realty 
for the lease and sale of the property.  Imperial Associates 
argues that Virginia Realty assumed only one obligation under 
both contracts, and that Imperial Associates' conditional promise 
of additional payment in the lease is not binding because 
Virginia Realty had a pre-existing duty to perform the same 
obligation under the listing agreement.  We disagree with 
Imperial Associates. 
 
We evaluate the consideration given for a contractual 
obligation in accordance with a well-established standard: 
 
Consideration is, in effect, the price bargained for 
and paid for a promise.  It may be in the form of a 
benefit to the party promising or a detriment to the 
 
 
 
 
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party to whom the promise is made.  It matters not to 
what extent the promisor is benefitted or how little 
the promisee may give for the promise.  A very slight 
advantage to the one party or a trifling inconvenience 
to the other is generally held sufficient to support 
the promise. 
 
Sager v. Basham, 241 Va. 227, 229-30, 401 S.E.2d 676, 677 (1991) 
(quoting Brewer v. Bank of Danville, 202 Va. 807, 815, 120 S.E.2d 
273, 279 (1961)); see also R.K. Chevrolet, Inc. v. Hayden, 253 
Va. ___, ___, ___ S.E.2d ___, ___ (1997), decided today. 
 
In reviewing the contracts before us, we also note that the 
words "originate" and "consummate" have different meanings.  The 
plain, ordinary meaning of the word "originate" is "to cause the 
beginning of: give rise to: initiate."  Webster's Third New 
International Dictionary 1592 (1993).  In contrast, the plain, 
ordinary meaning of the word "consummate" is "to bring to 
completion."  Id. at 490. 
 
Applying these definitions, we conclude that the listing 
agreement required Virginia Realty to originate a lease by 
presenting to the owner a person or entity which eventually 
executed a lease for the premises.  The listing agreement did not 
require Virginia Realty to complete the negotiation and execution 
of that lease to receive a rental commission. 
 
Unlike the listing agreement, however, the lease contained a 
provision for the payment of a sales commission, and recited 
different, additional consideration for that commission.  The 
sales commission was payable in consideration of Virginia 
Realty's consummation of a lease that resulted in a sale of the 
 
 
 
 
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property.  In order to consummate a lease, Virginia Realty was 
required to bring the transaction to completion.  The lease 
specifically stated that a sales commission "shall be in addition 
to the rental commissions provided for in the immediately 
preceding paragraph." 
 
This Court considered a similar factual situation in W.D. 
Nelson & Co. v. Taylor Heights Development Corp., 207 Va. 386, 
150 S.E.2d 142 (1966).  There, the lease provided that if the 
tenants purchased the premises during the lease term, the agent 
would receive a sales commission based on the gross amount of the 
purchase price "in consideration of Rental Agent's consummating 
this lease."  Id. at 388, 150 S.E.2d at 144.  The trial court 
held that this provision was unenforceable for lack of 
"sufficient consideration."  Id. at 388, 150 S.E.2d at 145. 
 
This Court held that "[a]lthough [the] promise to pay 
additional compensation was of a contingent nature it was based 
on adequate consideration.  Any other construction would be 
contrary to the intention of the parties as expressed by the 
plain language used and would amount to making a new contract for 
the parties."  Id. at 390, 150 S.E.2d at 145. 
 
As recognized above, the consummation of a lease can be 
sufficient consideration to support a promise to pay a sales 
commission in the event that the leased property is purchased by 
the tenant.  Here, however, the sufficiency of the consideration 
for Imperial Associates' promise to pay a sales commission was 
 
 
 
 
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decided by the trial court on Imperial Associates' motion for 
summary judgment.  In considering a motion for summary judgment, 
the trial court must adopt inferences from the facts alleged that 
are most favorable to the nonmoving party, unless those 
inferences are strained, forced, or contrary to reason.  Renner 
v. Stafford, 245 Va. 351, 353, 429 S.E.2d 218, 220 (1993); Carson 
v. LeBlanc, 245 Va. 135, 139-40, 427 S.E.2d 189, 192 (1993). 
 
Virginia Realty alleged in its motion for judgment that it 
procured a four-year lease with Kaestner and Associates, and that 
its services included assistance in the negotiation of that 
lease.  An inference can be drawn from the facts alleged that 
Virginia Realty performed additional services beyond originating 
the lease to consummate the lease executed by the parties.  Thus, 
at this stage of the proceedings, the legal requirement of 
consideration was satisfied. 
 
For these reasons, we will reverse the trial court's 
judgment and remand this case for further proceedings consistent 
with this opinion. 
 
Reversed and remanded.