Opinion ID: 773408
Heading Depth: 2
Heading Rank: 2

Heading: Broker Licensing Statutes

Text: 44 Connecticut law regarding real estate licenses provides in part: 45 No person who is not licensed under the provisions of this chapter, and who was not so licensed at the time the person performed the acts or rendered the services for which recovery is sought, shall commence or bring any action in any court of this state, after October 1, 1971, to recover any commission, compensation or other payment with respect to any act done or service rendered by the person, the doing or rendering of which is prohibited under the provisions of this chapter except by persons duly licensed under this chapter. 46 Conn. Gen. Stat. § 20-325a(a). 2 Section (b) of § 20-325a, which requires that valid real estate listings include several specific items, states: 47 No person, licensed under the provisions of this chapter, shall commence or bring any action with respect to any acts done or services rendered after October 1, 1995, as set forth in subsection (a), unless the acts or services were rendered pursuant to a contract or authorization from the person for whom the acts were done or services rendered. To satisfy the requirements of this subsection any contract or authorization shall: (1) Be in writing, (2) contain the names and addresses of the real estate broker performing the services and the name of the person or persons for whom the acts were done or services rendered, (3) show the date on which such contract was entered into or such authorization given, (4) contain the conditions of such contract or authorization, (5) be signed by the real estate broker or the real estate broker's authorized agent, (6) if such contract or authorization pertains to any real property, include the following statement: THE REAL ESTATE BROKER MAY BE ENTITLED TO CERTAIN LIEN RIGHTS PURSUANT TO SECTION 20-325a OF THE CONNECTICUT GENERAL STATUTES, and (7) be signed by the person or persons for whom the acts were done or services rendered or by an agent authorized to act on behalf of such person or persons, pursuant to a written document executed in the manner provided for conveyances in section 47-5, except, if the acts to be done or services rendered involve a listing contract for the sale of land containing any building or structure occupied or intended to be occupied by no more than four families, be signed by the owner of the real estate or by an agent authorized to act on behalf of such owner pursuant to a written document executed in the manner provided for conveyances in section 47-5. 48 Conn. Gen. Stat. § 20-325a(b). 49 The chapter defines a real estate broker or brokers as 50 any person, partnership, association, limited liability company or corporation which acts for another person or entity and for a fee, commission or other valuable consideration, lists for sale, sells, exchanges, buys or rents, or offers orattempts to negotiate a sale, exchange, purchase or rental of, an estate or interest in real estate, or... collects or offers or attempts to collect rent for the use of real estate. 51 Conn. Gen. Stat. § 20-311(1)(A). 52 The parties dispute the proper scope of Section 20-325a(a), a question which is the source of some controversy in Connecticut's courts. Fieger claims that he did not act as a real estate broker as that term is defined in Connecticut law, but instead served as a financial advisor to Pitney Bowes. Defendants argue that Fieger's services come within the Connecticut real estate licensing statute, and thus Fieger cannot bring a claim for a commission based on those services because he was not licensed as a real estate broker in Connecticut when he provided them. It is undisputed that Fieger did not possess a valid Connecticut real estate license at all times relevant to the instant action. Very few Connecticut courts have addressed the application of Section 20-325a(a) to the claim of a buyer's broker or financial advisor, and the Connecticut Supreme Court has not spoken on the issue. 53 Absent law from a state's highest court, a federal court sitting in diversity has to predict how the state court would resolve an ambiguity in state law. Michalski v. Home Depot, Inc., 225 F.3d 113, 116 (2d Cir. 2000). In predicting how a state's highest court would rule on an issue, it is helpful to consider the decisions of the state's trial and appellate courts. Id. The holding of an intermediate appellate state court... is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise. West v. AT&T, 311 U.S. 223, 237 (1940) (cited in Michalski, 225 F.3d at 116). Other data include relevant case law from other jurisdictions on the same or analogous issues, scholarly writings in the field, and any other resources available to the state's highest court. 3 Michalski, 225 F.3d at 116 (citing Leon's Bakery, Inc. v. Grinnell Corp., 990 F.2d 44, 48 (2d Cir. 1993)). 54 Two Connecticut cases, both of which applied Section 20-325a(a) to bar an unlicensed broker's action for commission, present facts similar to those of the case before us. In Wilder Group, Inc. v. Byers, No. Civ. XX-XXXXXXX, 1995 WL 127877, at  (Conn. Super. Ct. Mar. 14, 1995), the plaintiff, an unlicensed real estate broker, sued the defendant for a commission based on an alleged co-brokerage agreement. Although the plaintiff did not list the property, the court held that he had engaged in real estate activities because as a co-broker, the plaintiff, like the listing broker, attempt[ed] to negotiate the sale of the property in question by introducing his customers to it, and thereby attempt[ed] to interest them in it. Id. In doing so, the plaintiff served as a conduit for the negotiation and sale of the property, and in taking an active role in finding a purchaser for the defendant broker's listed property-was brokerage activity for which a Connecticut real estate broker's license was required. Id. at . 55 In Wilder, the plaintiff argued that Section 20-325a(a) did not apply to co-brokerage agreements, based on cases in which Section 20-325a(b) had been limited to listing agreements. Id. at - (relying on Conda v. Christensen, 528 A.2d 1159, 1160-63 (Conn. App. Ct. 1987)); see also Dow & Condon, Inc. v. Anderson, 525 A.2d 935, 481-83 (Conn. 1987) (§ 20-325a(b) did not bar real estate broker's action for deceptive practices against co-broker); Holmes v. Preferred Props., Inc., 462 A.2d 1057, 1059-60 (Conn. 1983) (§ 20-325a(b) did not apply to suit to enforce real estate employment contract to receive share of commissions); William Pitt, Inc. v. Taylor, 438 A.2d 1206, 1208 (Conn. 1982) (§ 20-325a(b) pertains only to the listing contract and not to the sales contract); Conda, 528 A.2d at 1160-63 (§ 20-325a(b) does not bar a licensed real estate broker's action to enforce a co-brokerage contract to recover portion of commission received by defendant co-broker); Perkins v. Elston Assocs., No. Civ. 970397, 459S, 1998 WL 550764, at  (Conn. Super. Ct. Aug. 12, 1998) (collecting § 20-325a cases, and stating, [g]enerally, courts have found that General Statutes § 20-325a applies only to listing agreements between the property owner and a real estate broker). The Wilder court rejected this argument, reasoning: 56 Unlike subsection (b), subsection (a) contains no language specifically [suggesting that its scope is limited to] agreements between brokers and property sellers. To the contrary, it expressly bars any suit to recover a commission by any person not licensed under [the real estate licensing law] for any act done or service rendered for which a valid Connecticut real estate license is required. 57 The full range of brokerage activity which is forbidden to any person who is not licensed under the provisions of [the real estate licensing law] is far broader than that which is specifically forbidden to licensed real estate brokers under subsection (b) of Section 20-325a. It therefore follows that subsection (a)'s unqualified prohibition of fee-recovery lawsuits by those who have engaged in unlicensed brokerage activity must be read more broadly than subsection (b)'s parallel proscription of such lawsuits by licensed brokers whose listing agreements fail to meet the requirements of that subsection. Indeed, in the absence of qualifying language in the statute, subsection (a) must be read to bar fee-recovery lawsuits for unlicensed brokerage activity of every kind and description for which a valid Connecticut broker's license is required. This, then, is necessarily broad enough to include the unlicensed rendering of services as a non-listing co-broker, finding a buyer for another broker's listed property. 58 Id. at . We believe that this explication of the relationship between Section 20-325a(a) and Section 20-325a(b) is accurate because it is faithful to both the letter of the statute and the policy underlying it. Thus, the cases limiting the scope of Section 20-325a(b) do not limit the scope of Section 20-325a(a). The Wilder court concluded: 59 [T]he prohibition against such lawsuits by non-licensed persons who engage in brokerage activity for which a valid Connecticut broker's license is required is absolute and unlimited. Therefore, because the activity for which the unlicensed plaintiff here seeks to recover a commission was plainly brokerage activity in which he had no right to engage without a valid Connecticut real estate broker's license, he is barred by subsection (b) of Section 20-325a from pursuing this lawsuit. 60 Id. at . 61 In Gagnon v. Shiller, No. Cv. 950374649, 1998 WL 346645, at  (Conn. Super. Ct. June 17, 1998),plaintiffs, who were not licensed real estate brokers, claimed that defendants had orally agreed to pay them a consulting fee for the acquisition and development of two property sites but had failed to pay the fee. Defendants raised Section 20-325a(a) as a defense. The trial court stated that Connecticut had applied a New Jersey rule to the brokerage law, which denies recovery to an unlicensed broker if the transaction includes any real estate regardless of its dominance. 4 Id. at  (internal quotation marks omitted). Relying on the Wilder Group decision, the court continued: Serving as a `conduit' in the negotiations between the potential buyer and seller of property constitutes brokerage activity within the meaning of General Statutes § 20-311(3). Id. at . Connecticut requires a license if the transaction involves any real estate. Id. (internal quotation marks and citation omitted). Where plaintiffs had described their services as to coordinate, negotiate, and pursue the acquisition of properties, the court determined that [t]he activities of the plaintiffs, as described in their complaint, constitute brokerage activities which the plaintiffs could not lawfully engage in without a valid Connecticut real estate broker's license, id., and dismissed the complaint. 62 Generally, Section 20-325a(a) serves as a complete bar to an unlicensed broker's claim for a real estate commission; however, some Connecticut courts have refused to apply Section 20-325a(a) to prohibit brokers' claims for employee compensation, such as claims for the division of sales commissions between employers and employees. See Holmes, 462 A.2d at 1059-60 (We do not view the compensation due from a real estate broker to his salesman-employee as being a commission within the contemplation of [§ 20-325a].... What the plaintiff and the defendant really contracted for is not the payment of a commission but a division of the fruits of their joint efforts which come to them from the owner in the shape of a commission.); Perkins, 1998 WL 550764, at - (Section 20-325a did not govern claim of former employee of real estate brokerage for share of commission as part of her compensation due under her employment agreement). These cases have carved out an exception to Section 20-325a(a) when the claim was based on a contract other than an agreement between the sellers and the purchasers. Fieger's claim does not benefit from this exception because he seeks payment from defendants, the purchasers, and he does not, as in these cases, advance a claim against another broker for part of a commission already paid by a purchaser. See id. 63 As noted above, our task is to predict how the Connecticut Supreme Court would apply Section 20-325a(a) to the evidence before us. 5 In his complaint, Fieger allegesthat he entered into an agreement with defendants under which he provided them with financial advice with regard to the SBC headquarters financing. The evidence submitted in connection with the summary-judgment motion shows that plaintiff was the conduit through which Pitney Bowes submitted its term sheet to SBC in April 1997. Fieger alleges that defendants failed to pay said agreed commission to the plaintiff or to make available said commission from the funds paid for the acquisition of said realty interests. Based on our canvas of Connecticut law, we believe that a Connecticut court would agree with the district court's determination that this evidence shows that Fieger's activities constituted real estate activity under Connecticut law. See Conn. Gen. Stat. § 20-311. 64 We also believe that a Connecticut court would hold that Fieger's claim is more similar to those claims addressed in Wilder and Gagnon, in which the court held that Section 20-325a(a) bars the claims, than to those cases in which the courts found Section 20-325a to be inapplicable. Here, Fieger claims that he facilitated the sale and leaseback of the Stamford headquarters by serving as an intermediary between defendants and SBC. Thus, like the plaintiffs in Wilder, he seeks recompense for his services in introducing defendants to a property and helping them negotiate a deal with the property owner. See Wilder Group, 1995 WL 127877, at -; see also Gagnon, 1998 WL 346645, at  (seeking a consulting fee for arranging purchase of property). As noted above, his claims do not fall within the court-created listing-agreement or commission-sharing exceptions to § 20-325a. Accordingly, Fieger's contract claim against PREFCO XXII is barred by Section 20-325a(a) because he was not a licensed real estate broker in Connecticut.
65 Fieger's quantum meruit claim and his contract claim against Pitney Bowes and PREFCO remain alive under New York law. Defendants argue that they should be dismissed because Fieger was not the procuring cause of the transaction and therefore is not entitled to a commission. The district court did not reach this defense because it dismissed plaintiff's claims as barred by Connecticut law. 66 Under New York law, to state a contractual claim for a commission, a broker must prove that the broker is duly licensed; that it had a contract, express or implied, with the party to be charged with paying the commission; and that it was the procuring cause of the sale. See Friedland Realty Inc. v. Piazza, 710 N.Y.S.2d 97, 98 (App. Div. 2nd Dep't 2000)(affirming grant of summary judgment in favor of plaintiff broker based on implied contract where [t]he evidence adduced established an amicable atmosphere, set up by the plaintiff, in which negotiations proceeded and generated a chain of circumstances that proximately led to the lease deal). To establish a quantum meruit claim under New York law, a plaintiff must prove that the defendant was enriched, that such enrichment was at the plaintiff's expense, and that circumstances were such that equity and good conscience require that the defendant should compensate the plaintiff. See R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 60 (2d Cir. 1997). In order to establish a quantum meruit claim to a commission, a broker must show that a sale is effected through his agency as the procuring cause. Id. (internal quotation marks omitted); see Edward S. Gordon Co. v. Peninsula N.Y. P'ship, 666 N.Y.S.2d 170, 170 (App.Div. 1st Dep't 1997) (affirming quantum meruit recovery where court had ample basis for finding that the plaintiff was the procuring cause for the lease that was subsequently consummated); Wertkin v. DePasquale, 70 N.Y.S.2d 225, 226 (Sup. Ct. Bronx County 1947) (affirming award on a quantum meruit basis and noting that [i]t is well-settled that if a broker was the procuring cause of the transaction in suit, he is entitled to compensation). 67 To establish either type of claim, a plaintiff must set forth evidence that he or she has performed acts of sufficient importance to the success of the deal that he or she should be reimbursed for his or her efforts. See, e.g., Greene v. Hellman, 433 N.Y.S.2d 75, 81 (N.Y. 1980) (describing minimum that a broker must do to warrant payment of commission as procuring cause); Helmsley-Spear, Inc. v. 150 Broadway N.Y. Assocs, L.P., 674 N.Y.S.2d 660, 661 (App. Div. 1st Dep't 1998) (where plaintiff made initial contact between buyer and seller but a second broker later facilitated the consummation of the deal, plaintiff failed to show that there was a proximate link between the broker's efforts and the consummation of the transaction); Provost v. St. Francis Commandery Hall Ass'n of Schenectady, N.Y., Inc., 499 N.Y.S.2d 489, 490 (App. Div. 3d Dep't 1986) (broker who claims he was not involved in negotiation process must somehow otherwise establish entitlement to commission); Briggs v. Rector, 451 N.Y.S.2d 520, 522 (App. Div. 4th Dep't 1982) (to be a procuring cause a broker must at least show that he created an amicable atmosphere in which negotiations went forward or that he generated a chain of circumstances which proximately led to the sale). Whether a party acted as a broker and whether he or she was a procuring cause entitled to a commission are questions of fact to be determined by a factfinder. See R.B. Ventures, 112 F.3d at 60-61; Kronish v. Koffman, 566 N.Y.S.2d 60, 61 (App. Div. 1st Dep't 1991) (whether plaintiff acted as a finder or a broker is a factual issue for trial); Smyczynski v. Goeseke, 451 N.Y.S.2d 496, 497 (App. Div. 4th Dep't 1982). 68 The court cannot presently grant defendants' request that it determine that plaintiff was not the procuring cause of the SBC transaction. On Fieger's view of the evidence, he helped prepare the terms that were the basis for the transaction, and he created the relationship between SBC and defendants which led to the December 1997 deal. On defendants' version, defendants only worked with plaintiff on the April 1997 proposal, which expired on its terms in May 1997. SBC's subsequent RFP created a new opportunity for defendants to bid on the SBC project, and defendants did not use plaintiff's assistancein successfully concluding that deal. On the present record, the available facts may support either conclusion and are too conflicted for us to determine whether Fieger procured the SBC sale and leaseback for Pitney Bowes. Accordingly, the district court must provide for a factfinder to resolve this dispute. See R.B. Ventures, 112 F.3d at 61 (holding that a factfinder must determine whether plaintiff's involvement in initial real-estate development proposal, which was not built, entitled plaintiff to a commission for completed second proposal, which involved plans similar to those for the initial proposal). 69 The court has considered defendants' other arguments and finds them to be without merit. 70 Accordingly, the judgment of the district court is affirmed with regard to plaintiff's contract claim against PREFCO XXII, but vacated and remanded with respect to plaintiff's contract claim against Pitney Bowes and PREFCO, and the quantum meruit claim.