Title: Rotemi Realty, Inc. v. Act Realty Company, Inc.

State: florida

Issuer: Florida Supreme Court

Document:

Supreme Court of Florida 
 
 
____________ 
 
No. SC04-210 
____________ 
 
 
ROTEMI REALTY, INC., et al., 
Petitioners, 
 
vs. 
 
ACT REALTY COMPANY, INC., 
Respondent. 
 
[July 7, 2005] 
 
CANTERO, J. 
 
We consider whether the common practice of paying real estate 
commissions contingent on consummation of the sale violates the public policy of 
this state when applied to a purchase or sale by the government.  In the decision we 
review, the Third District Court of Appeal invalidated such an arrangement, 
concluding that “contracts which provide for contingency awards for securing 
public monies are against public policy.”  Act Realty Co. v. Rotemi Realty, Inc., 
863 So. 2d 334, 336 (Fla. 3d DCA 2003) (citing City of Hialeah Gardens v. John 
L. Adams & Co., 599 So. 2d 1322 (Fla. 3d DCA), review denied, 613 So. 2d 5 
(Fla. 1992)).  This holding expressly and directly conflicts with our decision in 
 
 
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Robert & Co. v. Mortland, 33 So. 2d 732 (Fla. 1948), where we announced that as 
a “general rule” contingency fee contracts involving government procurement 
violate public policy only if shown to involve “favors or corrupt means.”  Id. at 
734.  We have jurisdiction to resolve the conflict.  Art. V, § 3(b)(3), Fla. Const.; 
Rotemi Realty, Inc. v. Act Realty Co., 880 So. 2d 1212 (Fla. 2004) (granting 
review).  For the reasons explained below, we reaffirm the general rule we 
announced more than fifty years ago and apply it to real estate brokerage 
commissions.  We hold, first, that the brokerage agreement in this case complies 
with Florida public policy; and second, that competent, substantial evidence 
supports the trial court’s ruling that the brokers were a procuring cause of the sale 
and therefore are entitled to their commission. 
I.  FACTS 
Toward the end of 1998, Maria Martin-Hidalgo, a real estate broker, met 
with the real estate director of the Miami-Dade County School District, which was 
looking for property to construct a new high school.  She tried to interest the 
director in a twenty-acre tract one of her clients owned, but he rejected it as too 
small.  He did, however, express interest in two other properties shown on a map 
on his wall.  The first was a U-shaped, fifty-acre tract controlled by attorney 
Michael Cease.  Recently, Cease had informed the School District that the property 
was available.  The second property, which Cease also had mentioned, consisted of 
 
 
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a ten-acre tract sandwiched inside the U-shaped one.  This smaller property was 
owned by the respondent, Act Realty.  The director informed Martin-Hidalgo that, 
although the District could build a high school on Cease’s fifty acres, it would be 
interested in acquiring the additional ten as well. 
After meeting with the director, Martin-Hidalgo contacted another broker, 
Jose Perez-Urrutia of Rotemi Realty.  Perez-Urrutia had previously dealt with and 
claimed to be “good friends” with the individuals who controlled both properties.  
Together these brokers, whose companies are the petitioners in this case, met with 
the owner of Act Realty and entered into a written brokerage agreement.  The 
agreement provided that if the brokers procured a sale of Act Realty’s property to 
the School District within a specified period they would receive a commission 
“equal to the amount of the sales proceeds due the owner at closing that is over 
$1,000,000.”  Martin-Hidalgo faxed to the School District a separate letter 
authorizing the brokers to negotiate the sale. 
The brokers then attempted to sell the ten-acre tract to the School District.  
Martin-Hidalgo spoke repeatedly with the District’s real estate director and also 
discussed the property with its appraisers.  The first offer went through her.  At the 
recommendation of the other broker, Perez-Urrutia, Act Realty conducted the 
remainder of the price negotiations jointly with Cease, who controlled the fifty-
 
 
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acre parcel.  Perez-Urrutia claims that he was responsible for maintaining the 
relationship between the two sellers. 
Even before the brokers became involved, however, the School District 
already had an interest in the two adjacent properties.  According to Kathryn 
Wilbur, the School District’s director of government affairs and land use policy 
and acquisitions, those properties represented “the only site within the area” that 
was suitable for a new high school.  A memorandum issued by Wilbur, and later 
approved by the regional superintendent, stated that the School District wished to 
acquire Cease’s fifty acres and “would also prefer that the middle 10 acres be 
acquired, if possible.”  In fact, the School District ordered an appraisal of the 
properties two days before the brokers approached Act Realty. 
The School District eventually purchased both properties at a uniform rate 
per acre.  The selling price for the ten-acre parcel was $1,164,650.50.  Before the 
closing, the brokers were informed that Cease had paid a lobbyist to persuade 
school board members to approve the transaction.  Although the brokers claimed 
not to have known about the lobbyist, they agreed to use $20,000 of their 
commission to pay the lobbyist (the lobbyist’s fee, which was not contingent on a 
sale, is not at issue here).  After subtracting the $20,000, the proceeds from the sale 
of Act Realty’s property still exceeded the $1 million mark by $144,650.50.  The 
brokers claimed they were entitled to this amount as a commission.  Act Realty 
 
 
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contested their claim.  The escrow agent therefore filed an interpleader action.  The 
brokers and Act Realty filed cross-complaints, and eventually the trial court 
conducted a non-jury trial.  
At trial, Act Realty argued that the brokers were not the procuring cause of 
the sale and thus were not entitled to a commission.  The trial court disagreed and 
entered judgment for the brokers.  In its order, the trial court explained that the 
brokers “clearly established that they were the procuring cause of the sale and 
brought the parties together resulting in the sale of the real property.”  According 
to the court, the brokers “proved that they initiated the negotiations, took 
affirmative action to bring the buyer and seller together, and that the transaction 
was closed and they were entitled to the agreed commission.” 
On appeal, the Third District reversed and remanded.  Act Realty Co., 863 
So. 2d at 338.  The district court concluded that the brokerage agreement between 
Act Realty and the brokers was “void and unenforceable because contracts which 
provide for contingency awards for securing public monies are against public 
policy.”  Id. at 336 (citing Hialeah Gardens, 599 So. 2d at 1323-24).  According to 
the district court, “this agreement undoubtedly created a situation in which there 
was a possibility for the use of ‘sinister and corrupt means’ in order (1) to 
influence the School Board to purchase this particular property from Act Realty, 
and (2) for the brokers to earn the highest possible commission by obtaining as 
 
 
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high a price as possible.”  Id. at 337 (quoting Hialeah Gardens, 599 So. 2d at 1323 
(quoting Wechsler v. Novak, 26 So. 2d 884, 885 (Fla. 1946))).  The district court 
ordered that the money in escrow be returned to the School District, so as to 
prevent Act Realty from “benefit[ting] via a windfall from the illegal contract.”  Id. 
at 338. 
Judge Cope dissented.  Id. at 338 (Cope, J., dissenting).  He faulted the 
majority for failing to distinguish Robert & Co., in which we held: “We understand 
the general rule to be that an employment in which compensation is contingent on 
success in securing contracts from public officials is not illegal on its face.  It must 
be shown that it was induced by favors or corrupt means.”  33 So. 2d at 734.  Judge 
Cope noted that at trial “no one alleged––much less proved––that there were any 
corrupt means involved in this land sale at all.”  Act Realty, 863 So. 2d at 342 
(Cope, J., dissenting).  Thus, he argued, there was no basis for invalidating the 
brokerage agreement.  Id. at 343. 
II. ANALYSIS 
The brokers now ask us to review the district court’s ruling, which expressly 
and directly conflicts with our decision in Robert & Co.1  Act Realty in turn asks 
                                          
 
1 The brokers also argue that the district court’s decision to raise the “illegality of 
contract” defense on its own motion conflicts with Busot v. Busot, 338 So. 2d 1332 
(Fla. 2d DCA 1976), and with Robert & Co.  We see no conflict on this issue.  
Those two cases hold that when a contract is valid on its face, the defense of 
 
 
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us to review the trial court’s ruling that the brokers were the procuring cause of the 
sale.  We address each issue in turn. 
A. Was the Brokerage Agreement Legal? 
 
The district court concluded that “contracts which provide for contingency 
awards for securing public monies are against public policy.”  Act Realty, 863 So. 
2d at 336 (citing Hialeah Gardens, 599 So. 2d at 1323-24).  This holding conflicts 
with Robert & Co., where we announced that as a “general rule” such contracts 
violate public policy only if shown to involve “favors or corrupt means.”  33 So. 
2d at 734.  Because no showing of corruption has been made or even attempted in 
this case, to approve the district court’s decision we would have to recede from 
Robert & Co.  We decline to do so.  To the contrary, we conclude that, at least as 
applied to real estate brokerage agreements, which have traditionally provided for 
fees contingent on the consummation of a sale, the general rule applied in Robert 
& Co. remains valid. 
                                                                                                                                        
illegality must be pleaded and proved at trial.  See Robert & Co., 33 So. 2d at 734; 
Busot, 338 So. 2d at 1334 (citing Lee v. Clearwater Growers Ass’n, 111 So. 722 
(Fla. 1927)).  In this case, the district court concluded that the agreement was not 
valid on its face.  See Act Realty, 863 So. 2d at 337.  We have long recognized that 
the facial illegality of a contract may be raised sua sponte by any court.  See, e.g., 
Citizens’ Bank & Trust Co. v. Mabry, 136 So. 714, 717 (Fla. 1931).  We disagree 
not with the district court’s decision to raise this issue, but with its conclusion that 
the contract was facially invalid. 
 
 
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In Robert & Co., the plaintiff agreed to assist the defendant in securing an 
engineering contract with the City of Tampa.  33 So. 2d at 732.  After obtaining the 
contract, the defendant refused to compensate the plaintiff for services rendered.  
Id. at 733.  The plaintiff brought suit, seeking a reasonable fee.  The defendant 
argued that their agreement was unenforceable because (1) the engineering contract 
was with a public agency, and the compensation for plaintiff’s services was 
contingent; and (2) the means used to secure the contract were personal or political 
and contrary to public policy.  Id.  We rejected this argument, noting as a “general 
rule . . . that an employment in which compensation is contingent on success in 
securing contracts from public officials is not illegal on its face.  It must be shown 
that it was induced by favors or corrupt means.”  Id. at 734.  Because the record in 
Robert & Co. was “devoid of any showing that the plaintiff had any personal or 
political influence or that the contract was induced by illegal influence,” we 
concluded the agreement was legal.  Id. 
We derived the “general rule” in Robert & Co. from two earlier decisions.  
The first was Edwards v. Miami Transit Co., 7 So. 2d 440 (Fla. 1942), in which a 
transit company entered a contingency-fee contract with an individual who 
attempted to secure a bus franchise from the City of Miami.  Id. at 440.  We 
refused to declare the contract facially illegal because it “conceivably could have 
been lawfully performed without any one engaging in any act or practice which 
 
 
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was contrary to public morals or to the public welfare.”  Id. at 442.  The other case 
was Wechsler, 26 So. 2d at 884, decided two years before Robert & Co.  We held 
there that “[t]he legality of agreements to influence administrative or executive 
officers or departments is to be determined in each case by weighing all the 
elements involved and then deciding whether the agreement promotes corrupt 
means to accomplish an end.”  Id. at 887.  Although Robert & Co., Edwards, and 
Wechsler were decided more than half a century ago, they represent our most 
recent statements on this subject.  Since then, we have neither confirmed nor 
questioned their general rule. 
Twenty-five years after Robert & Co., the Legislature enacted a law––
section 287.055, Florida Statutes––that would have affected that case.  Ch. 73-19, 
Laws of Fla.  Known as the “Consultants’ Competitive Negotiation Act,” the 
statute criminalizes the payment of a contingency fee for soliciting or securing a 
contract with a public agency regarding architecture, engineering, landscape 
architecture, surveying, or mapping.  See § 287.055(6), Fla. Stat. (2004).  Because 
Robert & Co. involved an engineering contract, one of the subjects covered by the 
statute, the contract in that case would be illegal today.  The brokers nevertheless 
argue that the general rule of Robert & Co. remains intact, and that the Legislature 
merely carved out an exception for contracts in certain particular fields.  Act 
Realty responds that the statute expresses a more general public policy against all 
 
 
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contingency-fee agreements for the procurement of government contracts.2  
According to Act Realty, “[t]here is no principled difference between the danger 
for corruption posed by the brokerage of professional services to the state for 
contingency commissions and the brokerage of real estate to the state on the same 
basis.”  Brief of Resp’t on the Merits at 36-37. 
To the contrary, we believe the difference is substantial.  Real estate 
brokerage agreements involving single-family homes, commercial businesses, and 
even government property all have a long history of contingency fees.  Flat-fee real 
estate brokerage agreements are virtually unheard of.  As Judge Cope stated in 
dissent below, 
It should be obvious that it is permissible for a landowner to 
hire a real estate broker to sell the owner’s land, and to compensate 
the broker by a commission in the event the real estate broker 
procures a sale.  It makes no difference whether the buyer is a public 
agency or a private person.  There is nothing inherently illegal about 
such an arrangement. 
 
Act Realty, 863 So. 2d at 341 (Cope, J., dissenting).  Judge Cope’s observations 
are confirmed by a well-known treatise, which summarizes the general rule 
followed in other jurisdictions as follows: 
                                          
 
2 Act Realty cites the statute’s preamble, which “declares it is in the public interest 
to prohibit the payment of contingent fees or other considerations for obtaining 
state, municipal or other professional service contracts financed from public 
funds.”  Ch. 73-19, Laws of Fla.  But this statement is less expansive than it 
appears, because the statute expressly defines the term “professional service 
contracts” to include only contracts involving architecture, engineering, landscape 
architecture, surveying, or mapping.  § 287.055(2)(a), Fla. Stat. (2004).   
 
 
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A person having something to sell has the right to sell it through an 
agent, and this right is an incident to his ownership.  To declare that 
he may not employ an agent, upon commission, where the 
government is the prospective buyer, is to take away what is 
ordinarily one of the elements of the enjoyment of ownership––the 
unrestricted right to sell.  Upon this line of reasoning, commission 
agreements for a sale to the government have been upheld and 
enforced in this state where the agreement did not actively require 
corruption in its performance.  Treated as a matter distinct in its nature 
from agreements to procure legislation, an agreement to compensate 
an agent for his successful efforts in traffic with the government has 
been held binding, where unfairness in the dealings or an intention to 
resort to corruption did not actually appear from the facts. 
7 Richard A. Lord, Williston on Contracts § 16:5, at 357-58 (4th ed. 1997) 
(footnote omitted).  The repercussions for the real estate sales industry from a 
holding that such contracts suddenly violate public policy as applied to purchases 
(and, by extension, sales) by government agencies would be unpredictable. 
Regardless of the differences between real estate brokerage agreements and 
those mentioned in section 287.055, the fact remains that the Legislature limited 
the scope of that statute and, for whatever reason, chose not to include real estate 
brokerage (and a great many other types of contracts) within its coverage.  We 
have generally recognized the principle of statutory construction, expressio unius 
est exclusio alterius—the mention of one thing implies the exclusion of another.  
See Grenitz v. Tomlian, 858 So. 2d 999, 1002 (Fla. 2003) (quoting Moonlit Waters 
Apartments, Inc. v. Cauley, 666 So. 2d 898, 900 (Fla. 1996)).  We also have 
recognized as a “general rule . . . that statutes in derogation of the common law are 
 
 
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strictly construed.”  BellSouth Telecomm., Inc. v. Meeks, 863 So. 2d 287, 290 
(Fla. 2003).  Consistent with these principles, we conclude that section 287.055 
applies only to the specific contracts it mentions and is irrelevant here. 
Act Realty also relies on section 112.3217, Florida Statutes (2004), which 
prohibits lobbyists from receiving fees contingent on executive branch action.  As 
defined in the statute, the term “lobbyists” includes those “seeking, on behalf of 
another person, to influence an agency with respect to a decision of the agency in 
the area of policy or procurement or an attempt to obtain the goodwill of an agency 
official or employee.”  § 112.3215(d)-(e), Fla. Stat. (2004).  Act Realty contends 
that the brokers became lobbyists when they attempted to procure the sale of 
property to a government entity.  We disagree.  The Legislature has classified real 
estate brokerage as a distinct “professional service,” and a body of statutes 
regulates that profession.  §§ 475.001-475.5018, Fla. Stat. (2004).  Those statutes 
impose on brokers the duties of loyalty, honesty, fair dealing, confidentiality, 
obedience, full disclosure, skill, care, and diligence––many of which tend to 
mitigate the dangers associated with contingency-fee payments.  § 475.278, Fla. 
Stat. (2004).  We doubt that the Legislature intended for restrictions on the 
occupation of lobbying to cover the separately regulated profession of real estate 
brokerage.  We therefore conclude that the restriction on contingency fees under 
 
 
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section 112.3217 does not apply to real estate brokers acting in the ordinary course 
of their profession, as these brokers were.   
The preceding analysis indicates that, while the Legislature has created 
exceptions to the “general rule” of Robert & Co., it has left the core of the rule 
intact.  We, too, leave the rule as it is.  The doctrine of stare decisis counsels us to 
follow our precedents unless there has been “a significant change in circumstances 
after the adoption of the legal rule, or . . . an error in legal analysis.”  Dorsey v. 
State, 868 So. 2d 1192, 1199 (Fla. 2003).  Although fifty-seven years have passed 
since we decided Robert & Co., the relevant circumstances have not significantly 
changed.  Nor did that case involve an analytical error.  We therefore apply the 
doctrine of stare decisis, which “provides stability to the law and to the society 
governed by that law.”  State v. Gray, 654 So. 2d 552, 554 (Fla. 1995) (citing State 
v. Schopp, 653 So. 2d 1016 (Fla. 1995) (Harding, J., dissenting)); see also Tyson v. 
Mattair, 8 Fla. 107, 124 (1858) (noting that a commitment to precedent helps “to 
keep the scale of justice even and steady”). 
The general rule continues to be that “an employment in which 
compensation is contingent on success in securing contracts from public officials is 
not illegal on its face,” but rather is illegal only if shown at trial to involve “favors 
or corrupt means.”  Robert & Co., 33 So. 2d at 734.  We see no reason why this 
general rule should not apply specifically to the real estate brokerage industry, in 
 
 
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which contingency fees have long been the professional norm.  We find it hard to 
imagine an industry in which good-faith reliance on Robert & Co. has been more 
widespread.  We therefore apply Robert & Co.’s rule to this case.  Because the trial 
record contains no evidence of corruption or improper influence, we quash the 
decision of the district court and hold that the brokerage agreement between the 
brokers and Act Realty complies with Florida public policy. 
B. Did the Brokers Procure the Sale? 
The brokerage agreement provided that the brokers would receive all sales 
proceeds in excess of $1 million if they were “able to procure a sale [of Act 
Realty’s property] with the school board of Dade County Florida as the buyer.”  At 
trial, the primary question was whether the brokers did, in fact, procure the 
eventual sale.  The trial court found that they “clearly” did.  According to the trial 
court, the brokers “proved that they initiated the negotiations, took affirmative 
action to bring the buyer and seller together, and that the transaction was closed 
and they were entitled to the agreed commission.”  Act Realty appealed this ruling 
to the district court, which did not reach the issue because it decided that the 
agreement was facially illegal.  Because we quash the district court’s decision on 
that issue, whether the brokers were a procuring cause of the sale becomes 
relevant. 
 
 
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Many Florida courts, over a long period of time, have discussed the 
requirements for “procuring” a real estate sale.  See Osheroff v. Rauch Weaver 
Millsaps & Co., 882 So. 2d 503, 505 (Fla. 4th DCA 2004) (explaining that “[t]he 
law in this area has been well established for quite some time, although its 
application to a given set of facts is a bit more troublesome”), review denied, 898 
So. 2d 938 (Fla. 2005).  The seminal case on the subject is Taylor v. Dorsey, 19 
So. 2d 876 (Fla. 1944), where we explained that “[i]f the broker has brought the 
parties together and a sale is effected as a result of continuous negotiations 
inaugurated by him, he will not be defeated in his effort to recover compensation 
simply because of a variation between the original terms stated by the owner and 
those finally accepted.”  Id. at 878.   
Interpreting Taylor, the district courts have recognized that to earn a 
commission a broker must perform two essential tasks: First, the broker must 
“initiate[] negotiations by doing some affirmative act to bring buyer and seller 
together.”  Ehringer v. Brookfield & Assocs., 415 So. 2d 774, 775-76 (Fla. 5th 
DCA 1982).  Second, the broker must remain “involved in the continuing 
negotiations between the seller and the buyer,” unless “the seller and buyer 
intentionally exclude the broker from the negotiations.”  Siegel v. Landquest, Inc., 
761 So. 2d 415, 417 (Fla. 5th DCA 2000) (citing Shuler v. Allen, 76 So. 2d 879, 
883 (Fla. 1955), and Sheldon Greene & Assocs. v. Rosinda Invs., N.V., 475 So. 2d 
 
 
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925, 927 (Fla. 3d DCA 1985)), review denied, 780 So. 2d 914 (Fla. 2001).  
Whether a broker has performed these tasks “is a question of fact that the [fact-
finder] must determine from the surrounding circumstances.”  Osheroff, 882 So. 2d 
at 505 (citing Easton-Babcock & Assocs. v. Fernandez, 706 So. 2d 916 (Fla. 3d 
DCA 1998)).  Appellate courts uphold such determinations when supported by 
competent, substantial evidence.  See, e.g., Brickell Bayview Real Estate, Inc. v. 
Cooper, 691 So. 2d 1094, 1094 (Fla. 3d DCA 1997). 
We conclude that competent, substantial evidence supports the trial court’s 
finding that the brokers procured the sale of Act Realty’s property to the School 
District.  The record shows that the brokers initiated negotiations by faxing to the 
School District a letter authorizing them to negotiate the sale of Act Realty’s 
property.  At that point, the School District had already developed an interest in 
Act Realty’s property, but had not yet contacted Act Realty to begin negotiations.  
In fact, Act Realty’s owner testified that he “did not know that the School Board 
was interested” in his property when he met with the brokers.  The brokers’ fax 
was the “affirmative act” setting in motion the negotiations between Act Realty 
and the School District.  Ehringer, 415 So. 2d at 775. 
The record also shows that the brokers remained “involved in the continuing 
negotiations.”  Siegel, 761 So. 2d 417.  One of them, Martin-Hidalgo, testified that 
she communicated with the School District’s real estate director “every couple 
 
 
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weeks.”  She asked the director for a copy of the agenda that was presented to the 
school board at a preliminary hearing and forwarded it to Act Realty.  She also 
“discussed the land and surrounding land values” with two of the School District’s 
appraisers.  When the District made its first offer of $800,000, she conveyed it to 
Act Realty and then reported back that it was too low.  The other broker, Perez-
Urrutia, advised Act Realty to negotiate the sales price jointly with Cease, who 
controlled the adjacent property.  Act Realty apparently took his advice.  Cease 
testified that he took over negotiations for both properties with respect to price.  
Perez-Urrutia thereafter maintained “constant contact” with Cease, speaking with 
him “practically every day.”  Thus, substantial, competent evidence supports the 
trial court’s finding that the brokers were a procuring cause of the sale. 
III. CONCLUSION 
We quash the decision of the district court and hold that a real estate broker 
may be paid a contingency fee for the sale of private property to the government, 
unless the sale was obtained through corruption or improper influence.  We affirm 
the trial court’s ruling that the brokers were the procuring cause of the sale and are 
entitled to a commission. 
It is so ordered. 
PARIENTE, C.J., and WELLS, ANSTEAD, LEWIS, QUINCE and BELL, JJ., 
concur. 
 
 
 
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NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
 
Application for Review of the Decision of the District Court of Appeal – Direct 
Conflict 
 
 
Third District - Case No. 3D02-1707 
 
 
(Dade County) 
 
Sheldon R. Rosenthal of the Law Offices of Sheldon R. Rosenthal, Miami, Florida, 
 
 
for Petitioners 
 
Silvia M. Gonzalez of Silvia M. Gonzalez, P.A., Miami, Florida, 
 
 
for Respondent 
 
Melinda L. McNichols, Miami, Florida, 
 
 
for Amicus Curiae The School Board of Miami-Dade County, Florida 
 
Henry T. Sorensen, II of Brokers Legal Group, P.A., Palm Harbor, Florida, 
 
 
for Amicus Curiae Cres Commercial Real Estate of Tampa Bay, Inc.