Court Opinion

ID: 9773730
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:57:04.266591+00
Date Added: 2024-06-11T07:31:56.824305
License: Public Domain

GONZALEZ, Justice,
joined by PHILLIPS, Chief Justice and ABBOTT, Justice, concurring and dissenting.
I concur in the Court’s judgment to the extent that it bars Harkinson’s claims against the owners of the property, Trammell Crow Company No. 60 and Petula Associates, Ltd., and Petula’s parent company, Principal Mutual Life Insurance Company, and its manager Douglas Achtemeier (“owners”). However, as to the other defendants, the Court refuses to follow precedent, holds that a cause of action for interference with a written exclusive agency contract is barred by section 20(b), the statute of frauds provision of the Real Estate License Act (“RELA”), and for the first time in Texas jurisprudence, allows that provision to be asserted as a defense by persons who were not parties to a commission agreement with which they interfered. Because section 20(b) does not apply to such a situation, I would follow Clements v. Withers, 437 S.W.2d 818, 821 (Tex.1969), and Warren v. White, 143 Tex. 407, 185 S.W.2d 718, 719-20 (1945), and would enforce the duties placed on real estate agents by article 6573a, section 15 of the Texas Real Estate License Act.
This is an appeal from a summary judgment. Thus, I will restate some pertinent facts, indulging every reasonable inference in favor of the non-movants and resolving any doubts in their favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 549 (Tex.1985). William Jeff Harkinson, a licensed real estate broker, entered into a signed, written exclusive agency agreement with Hunt Products (“Hunt”) which provided that for one year, Harkinson would be Hunt’s exclusive representative in its search for office/warehouse lease space. Harkinson negotiated this contract with Dan Patterson, an officer, director, and shareholder of Hunt, and John J. McLaine, Chairman and Chief Executive Officer of Hunt. Hunt agreed that it would refer all inquiries it received to Harkinson, and Harkinson agreed to look only to the prospective landlord/owner for his brokerage fee.
Harkmson located some property of which Trammell Crow Dallas Industrial (“Industrial”) is the manager. Industrial was acting as an agent on behalf of the building owners, Trammell Crow Company No. 60 and Petula Associates. Harkinson began negotiations for lease space with Richard Strader, a lawyer/real estate agent employed by Industrial. Thomas Leiser was Strader’s immediate supervisor throughout this process. During the negotiations, Harkinson gave Strader a copy of his exclusive agency agreement with Hunt. Harkmson and Strader orally agreed that Harkinson would be paid a %% up-front cash commission for locating a tenant for the property.1 Strader then sent Harkinson a written commission agreement, which Har-kinson did not sign. Instead, he revised it to reflect the terms of the oral agreement, signed the revised agreement, and returned it to Strader. Harkinson asked Strader several times when a copy of the signed commission agreement would be returned to him. Each time, Strader told Harkinson that the revised agreement was acceptable and that *638Leiser would sign it and return it as soon as possible. Although he had not received a copy of the completed written agreement, Harkinson continued lease negotiations with the owners and agreed on a price of over $7,000,000.
After Patterson read the lease, he considered whether reducing Harkinson’s commission would lower the price Hunt would have to pay to lease the premises. Instead of working with Harkinson, his exclusive agent, Patterson went behind Harkinson’s back and contacted another broker, Jim Massey, who began secret negotiations on Patterson’s behalf with Strader and Leiser to cut Harkin-son’s commission in order to lower Hunt’s rental rate. After a conversation with Massey, Leiser told Strader to call Patterson directly to discuss this matter. Patterson asked Strader whether lowering Harkinson’s commission would result in a lower rental rate for Hunt, and Strader told him it would. Patterson also asked Strader whether the owners had a signed commission agreement with Harkinson, and Strader told him they did not. Strader then told Patterson that he thought a $30,000 commission for Harkinson would be fair, and a second proposed lease agreement was drafted. This second proposal provided for a lower rental rate.
Harkinson was kept completely in the dark about the discussions that led to the second proposal. He eventually received the new proposal along with a letter from Strader stating that the reduced rental rate resulted from lower construction costs and “other savings.” Harkinson later learned that the “other savings” included money saved by reducing his commission. When Harkinson asked about the reduction in his commission, McLaine advised Harkinson to accept the lower commission because Hunt was definitely going to lease the building. Leiser told Harkinson that his options with regards to the $30,000 commission were to “take it or leave it.” Approximately a month later, Hunt signed a lease for the budding, agreeing to pay $7,700,000 in rent over the term of the lease. Industrial, as agent for the owners, collected a 6% commission of $462,000. Strader personally received $103,960 as his part of this commission. Harkinson refused the $30,000 offer, and this lawsuit followed.
I.
Harkinson’s claims against Patterson are (1) tortious interference with the oral commission agreement between Harkinson and the owners, (2) tortious interference with Harkinson’s prospective business relations with the owners, and (3) civil conspiracy to tortiously interfere. For two reasons, section 20(b) of RELA does not bar these claims: First, the actual wording of the statute, and second, the purpose behind it.
Section 20(b) reads:
An action may not be brought in a court in this state for the recovery of a commission for the sale or purchase of real estate unless the promise or agreement on which the action is brought, or some memorandum thereof, is in writing and signed by the party to be charged or signed by a person lawfully authorized by him to sign it.
Tex.Rev.Civ. Stat. Ann. art. 6573a, § 20(b). By its explicit wording, this section applies to “[a]n action ... for the recovery of a commission” based on a “promise or agreement” against the “party to be charged” with that promise or agreement. See Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex.1978) (citing general statute of frauds, which provides that an agreement must be signed by the person to be charged with the promise or agreement). As the Court notes, the exclusive representation agreement between the prospective tenant Hunt and Harkinson expressly provides that Harkinson “will look solely to the landowner/owner for his fee.” 944 S.W.2d at 632. No terms of the agreement charged Hunt, Patterson/McClaine, or Patterson with any obligation to pay the commission. Accordingly, the only parties that can properly be charged with that commission are Crow No. 60 and Petula, who owned the property. Therefore, by its own terms, section 20(b) applies to a suit for a commission against the party who promised or agreed to pay such commission, and who must have signed the commission agreement. It does not apply to a stranger to the agreement whose interference caused the broker *639to suffer monetary damages. See Clements v. Withers, 437 S.W.2d 818, 821 (Tex.1969).
In Clements, just as in the case before us, the tortious interference suit was not brought against the party to be charged the commission, but against a third party who interfered with the plaintiffs right to that commission. Id. The majority attempts to distinguish Clements on the fact that in that ease, there was a signed commission agreement that was deficient in its description of the property, while the deficiency in our case is that the written commission agreement was not signed by the owners. The Court declares there is a difference between the “technical deficiency” in the Clements writing and a total absence of any signed2 944 S.W.2d at 635. However, the Court gives no authority for this proposition. The Court has crafted the only authority by setting up separate, ad hoc categories under the heading of “unenforceable contracts,” still allowing for a cause of action for interfering with one type of unenforceable contract in Clements, while disallowing a claim for tortious interference with another type of unenforceable contract in this case.
In Clements, we stated that the RELA statute of frauds “does not give third parties the right to interfere with the performance of oral contracts.” Id. at 821 (emphasis added). Nevertheless, today’s opinion states that the fact that there was at least some signed writing in Clements is a “critical factual distinction” from the present case. 944 S.W.2d at 635. If that is true, why did we in Clements state that third parties may not interfere with oral contracts? Clements, 437 S.W.2d at 821. If the Court is intimating that we meant to say “oral contracts evidenced by a signed writing,” it should state as much and admit that it is overruling Clements.
In its further attempt to distinguish Clements, the Court refers to the “public policy” of section 20(b) as precluding an action for tortious interference with HarMnson’s unenforceable contract with the owners. To support this statement, the Court curiously cites to the statute itself and to our decision in Travel Masters, Inc. v. Star Tours, Inc., 827 S.W.2d 830, 833 (Tex.1991). However, in Travel Masters, we held that the covenant not to compete in that case was an unreasonable restraint of trade and unenforceable as against public policy. As a result, this covenant could not form the basis of a tortious interference claim. Id. Travel Masters does not provide authority for the proposition that because the agreement between Harkinson and the owners is unenforceable, it is also against public policy. If that broad statement were true, Travel Masters would have overruled Clements, in which we stated that even though the contract was unenforceable, there was not “any public policy opposing its performance.” Clements, 437 S.W.2d at 821; see Hutchings v. Slemons, 141 Tex. 448, 174 S.W.2d 487, 489-90 (1943) (interpreting RELA’s statute of frauds and stating that it does not render void or illegal a promise or contract within its terms, but merely establishes a rule of evidence).
Nor does section 20(b) itself indicate that an agreement unenforceable under the statute is also against public policy. The predecessor to section 20(b), which was virtually identical to the current version, rendered the commission agreement in Clements unenforceable. Act of June 1, 1955, 54th Leg., R.S., ch. 383, § 1, 1955 Tex. Gen. Laws 986, 1001 (repealed) (current version at Tex.Rev. Civ. Stat. Ann. art. 6573a, § 20(b)). Why then, was a claim for tortious interference with that agreement still allowed? The statute states that the promise or agreement must be “in writing” and must be “signed.” In Clements, it was the “writing” prong of the statute that was not satisfied because the description of the land to be sold was not sufficient. Clements, 437 S.W.2d at 820. In the present case, it is the “signed” prong of the statute that has not been satisfied. The concerns that rendered the Clements *640agreement unenforceable under the same statutory provision are no less sweeping or important than the concerns that render HarMnson’s agreement unenforceable. The Court has simply chosen to create an arbitrary distinction while labeling its reason as one dictated by “public policy.”
II.
Besides its express wording, the fact that section 20(b) is RELA’s statute of frauds provision is enough to indicate that it should not be used to bar claims against third parties to real estate commission agreements. Section 20(b) is to be interpreted consistently ■with the general statute of frauds provision found in the Business and Commerce Code. Boyert v. Tauber, 834 S.W.2d 60, 63 n. 2 (Tex.1992) (citing Tex. Bus. & Com.Code § 26.01). The general rule of law in this state for more than 100 years is that a statute of frauds defense is personal to the parties to a contract. See Gulf, C. & S.F. Ry. Co. v. Settegast, 79 Tex. 256, 15 S.W. 228, 229 (1891); see also “Moore” Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 938-39 (Tex.1972); Sasser v. Dantex Oil & Gas, Inc., 906 S.W.2d 599, 605 (Tex.App. — San Antonio 1995, no writ); General Bonding & Cos. Ins. Co. v. McCurdy, 183 S.W. 796, 800 (Tex.Civ.App. — San Antonio 1916, writ ref'd); Western Union Tel. Co. v. Taylor, 167 S.W. 289, 290 (Tex.Civ.App. — Austin 1914, writ ref'd); McManus v. Matthews, 55 S.W. 589, 590 (Tex.Civ.App.1900, writ refd); Bell v. Beazley, 18 Tex.Civ.App. 639, 45 S.W. 401, 403 (1898, no writ). Here, the Court disregards the general rule and allows a third party to invoke the defense. Numerous cases have held that a plaintiff may maintain a tortious interference suit against a third party even if the contract is unenforceable under section 20(b), because RELA’s statute of frauds simply may not be invoked as a defense by a third party. See Davis v. Freeman, 347 S.W.2d 650, 654-55 (Tex.Civ.App. — Dallas 1961, no writ); Wyche v. Noah, 288 S.W.2d 866, 867-68 (Tex.Civ.App. — Dallas 1956, writ refd n.r.e.); Yarber v. Iglehart, 264 S.W.2d 474, 476 (Tex.Civ.App. — Dallas 1953, no writ). Today, despite more than a century of jurisprudence to support those decisions, the Court effectively overrules them, enabling tenants such as Hunt to interfere with commission agreements between parties if there are personal financial rewards to be reaped by doing so.
Furthermore, today’s holding is not in line with the purpose of section 20(b) as we identified it in Warren v. White, 143 Tex. 407, 185 S.W.2d 718 (1945). In that case, real estate broker T.C. Warren had a written agreement to be paid a commission by Mrs. Claude Kelly if he sold Mrs. Kelly’s ranch. Another broker, AJ. White had a prospective purchaser for a ranch. He and Warren orally agreed that in consideration for Warren’s furnishing White with the necessary information about the ranch for sale, White would sell the ranch to his customer and they could divide the commission between them. Id. When White did not honor the agreement, Warren sued for his share of the commission. After examining other states’ similar real estate statutes of frauds provisions, we held that the purpose of the RELA statute of frauds was to protect the property owner from the imposition of false claims by real estate brokers. Id. 185 S.W.2d at 719. It did not apply to an agreement between brokers to share benefits, we reasoned, because this was not one between the owner and broker for the payment of a commission for the sale of land. Id. at 720.
Similarly, the suit by Harkinson against Patterson is not to enforce an agreement between a broker and a landowner. It is to recover for a third party’s interference with such an agreement, and thus does not fall within the purposes of section 20(b). In fact, the damages for which Harkinson sued are even farther removed from the recovery of a real estate commission than those claimed by the plaintiff in Warren. In Warren, there is no disputing that the suit was for a portion of the actual fee that was paid by the owner of the property. Id. at 718. Still, the RELA statute of frauds did not apply because it was intended to regulate the relationship between property owners and brokers. See id. at 719; Brice v. Eastin, 691 S.W.2d 54, 57 (Tex.App. — San Antonio 1985, no writ) (stating that the RELA statute of frauds was designed to protect the landowner from the *641imposition of false claims by real estate brokers).
III.
The claims with regard to Industrial, Strader, and Leiser, are (1) tortious interference with Harkinson’s exclusive representation agreement with Hunt, and (2) civil conspiracy to tortiously interfere. These are not claims for interference with Harkinson’s commission agreement with the owners, but rather for interference with his opportunity and right to exclusively represent Hunt. Again, section 20(b) is a statute of frauds provision that governs commission agreements between real estate brokers and property owners. Therefore, it should not be invoked as a defense to interfering with a completely separate exclusive agency agreement.
I folly understand that a commission cannot be recovered against the party to a commission agreement unless a signed writing evidences the agreement. However, that requirement does not apply to Industrial, Strader, and Leiser. They were not the owners of the property. In their capacities as real estate agents for the owners, they were not the parties to be charged with the commission. Instead, they were agents who gained financial rewards by interfering with Harkinson’s rights under his exclusive agency agreement with Hunt. Still, the Court insists on allowing a statute of frauds provision to act as a defense to this egregious conduct. I will not join such a radical departure from our state’s statute of frauds jurisprudence.
Furthermore, the Legislature has declared that this alleged conduct is unethical and unlawful. Section 15 of article 6573a in part provides as follows:
Sec. 15. (a) ... The commission may suspend or revoke a license issued under the provisions of this Act at any time when it has been determined that:
... (6) the licensee, while performing an act constituting an act of a broker ... has been guilty of:
... (N) negotiating or attempting to negotiate the sale, exchange, lease, or rental of real property with an owner, lessor, buyer, or tenant, knowing that the owner, lessor, buyer, or tenant had a written outstanding contract, granting exclusive agency in connection with the transaction to another real estate broker;
... (V) conduct which constitutes dishonest dealings, bad faith, or untrustworthiness. ...
Tex.Rbv.Civ. Stat. Ann. art. 6573a, § 15.
Here, Harkinson had a written, signed exclusive agency agreement with Hunt and Patterson/McLaine. This vested in him rights which only he could exercise and obligated Industrial, Strader, and Leiser not to interfere with Harkinson’s right to make a reasonable fee. Under the above statute, real estate brokers are prohibited from negotiating with a tenant knowing that the tenant has “grant[ed] exclusive agency in connection with the transaction to another real estate broker.” Id. § 15(a)(6)(N). That is precisely what Harkinson has alleged happened here. Strader and Leiser negotiated directly with Hunt and an outside broker, Jim Massey, to reduce Hunt’s rental rate and Harkin-son’s commission, knowing that Harkinson was Hunt’s exclusive agent. The penalty for such unethical conduct is the imposition of civil liability and/or the possible suspension or revocation of the interfering brokers’ real estate licenses. Therefore, I do not understand the Court’s decision to render a take-nothing judgment in favor of Industrial, Strader, and Leiser when there exist genuine issues of material fact as to whether these defendants committed the acts Harkinson alleges.
IV.
The court states that it is sympathetic to Harkinson’s claims. 944 S.W.2d at 635. Har-kinson does not need or want our sympathy. He merely requests that we enforce his rights to have his contracts protected from interference by others, and that we take note of the serious allegations of unethical and illegal conduct on the part of the defendants. Regrettably, today’s decision will cause consternation and confusion in the real estate industry. The validity of exclusive agency agreements of the type involved is now ques*642tionable. It could be argued that they are worthless.
For all of the above reasons, in my opinion, there exist issues of material fact that preclude a summary judgment. Thus, I would affirm the judgment of the court of appeals to the extent it allows tortious interference and civil conspiracy causes of action against parties not charged with the commission agreement between Harkinson and the owners. I would remand this cause to the trial court for a trial on the merits.

. Harkinson alleges that pursuant to an agreement with the owners, Industrial was to receive a 2)4% commission when an outside broker located a tenant for the property, and a 4)4% commission if Industrial procured a tenant without an outside broker.

. I emphasize the word "signed” because there is not a total absence of any writing. Indeed, as previously discussed, a written commission agreement had been revised by Harkinson and Strader and exchanged between them, with Strader even telling Harkinson that the revised agreement was acceptable and wotdd be signed by his supervisor Leiser and returned as soon as possible.