Opinion ID: 1234947
Heading Depth: 1
Heading Rank: 3

Heading: LFC's Right to Receive a Broker's Fee

Text: As stated, LFC and its agents have been found guilty of breaching their fiduciary relationship with the Loomises. Nevertheless, in spite of the mentioned perfidy, LFC successfully obtained judgment against the Loomises for a real estate brokers' fee arising out of the sale of the subject property to Allright. Rather than discuss the relationship of real estate brokers' breach of fiduciary relationship to their entitlement to a fee from the persons with whom they have broken faith, we limit our discussion to LFC's violations of Nevada's real estate brokers' licensing laws. The Loomises assert that LFC is barred from bringing an action for a commission on the sale of the triangle piece to Allright because of LFC's willful evasion of Nevada's real-estate licensing scheme (NRS Chapter 645, hereinafter the Act). We agree. The legislature has enacted a comprehensive regulatory scheme (the Act) for the purpose of protecting the public in their dealings with persons in the real estate profession. Whiddett v. Mack, 50 Nev. 289, 295-96, 258 P. 233, 233-34 (1927). The purpose of the Act is to restrict the vocation of acting as a real estate broker or real estate salesman to persons bearing a good reputation for honesty, truthfulness, fair dealing, and competency. Id. at 295, 258 P. at 234 (citations omitted); see NRS 645.330. The Act makes it unlawful for anyone to act as a broker or salesman without a Nevada real estate license. NRS 645.230(1). [4] In addition, NRS 645.030 describes what kinds of activities constitute acting in the capacity of a broker or salesman. NRS 645.030 provides that a broker or salesman is any person, including a corporation, who, for another and for compensation or with the intention or expectation of receiving compensation: [] Sells, exchanges, options, purchases, rents, or leases, or negotiates or offers, attempts or agrees to negotiate the sale, exchange, option, purchase, rental, or lease of... any business or real estate. NRS 645.030(1)(a). Even a single act that falls within the description of the activities of a real estate broker described in NRS 645.030 constitutes action in the capacity of a broker or salesman. NRS 645.260. In the present case, both Lange, who negotiated LFC's listing agreement with the Loomises, and Valentine, who met repeatedly with the Loomises and potential buyers and who, LFC now argues, was the procuring cause of the sale to Allright, undisputedly committed acts falling within the description of broker or salesman. Neither had applied for, nor been issued, a Nevada real estate license. LFC contends that individual licensure was unnecessary because Lange's and Valentine's actions fell within the sphere of permissibility provided by LFC's corporate license. This contention lacks merit. The Act requires that any partnership or corporation doing business as a real estate broker must designate one of its members to apply for the broker's license to be issued to the corporation or partnership. NRS 645.370(1). Additionally, each member or officer of a corporation or partnership who is going to perform or engage in any of the acts specified in NRS 645.030 shall ... take out a separate broker's license in his [or her] own name individually. NRS 645.380 (emphasis added). Clearly any requirement of corporate licensure is in addition to, rather than in place of, the requirements of individual licensure. LFC also contends that, even if Lange and Valentine are required to have been licensed, LFC, its breach of fiduciary duties aside, has substantially complied with the licensing requirements and that LFC should be allowed to maintain an action in equity for its commission. Nevada follows the general rule that contracts made in contravention of the law do not create a right of action. Vincent v. Santa Cruz, 98 Nev. 338, 341, 647 P.2d 379, 381 (1982). As one court aptly stated: [N]o court should be required to serve as paymaster of the wages of crime. Stone v. Freeman, 298 N.Y. 268, 82 N.E.2d 571, 572 (1948). This rule, however, is not absolute; in fact, this court has recognized a narrow exception to it. For example, in Magill v. Lewis, 74 Nev. 381, 386, 333 P.2d 717, 720 (1958), this court allowed an unlicensed building contractor to try its case on a theory of fraud and unjust enrichment because no serious moral turpitude [was] involved and because the defendant [was] the one guilty of the greatest moral fault. Similarly, in Nev. Equities v. Willard Pease Drilling, 84 Nev. 300, 303, 440 P.2d 122, 123 (1968), this court held that a contractor licensed by Nevada to drill for oil and gas was not barred from bringing suit merely because it lacked a specialty license to drill for hot mineral water. This court reasoned that the drilling company had substantially complied with the licensing scheme, specifically noting that there was no suggestion that the drilling company was wanting in experience, financial responsibility, or indeed, in any particular detrimental to the safety and protection of the public. Id., 440 P.2d at 123. We do not find the narrow exception carved out in Magill and Nev. Equities to be apposite to the facts of the present case. LFC is an experienced and sophisticated corporate broker whose actions in contravention of Nevada real estate law were blatant, substantial, and repeated. Equity will not relieve LFC of its clear obligations to comply with Nevada's real estate regulatory scheme, especially in light of LFC's having violated its fiduciary duties to its principal. We, therefore, conclude that LFC is barred from recovering a commission from the Loomises. The judgment awarding the Loomises $18,500.00 in damages for the breach of contract by Republic is reversed. The judgment awarding LFC a commission of $95,000.00 under its contract with the Loomises and its accompanying award of attorneys' fees and costs is reversed. The judgment in favor of the Loomises for breach of implied covenant of good faith and fair dealing is reversed. [5] We, therefore, remand this matter to the district court with instructions that it enter judgment against Republic and in favor of the Loomises in the amount of $275,000.00, the amount required by the parties' contract as liquidated damages. In light of this disposition, the judgment for attorney's fees in favor of respondent LFC is reversed.