Court Opinion

ID: 9472391
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:58:44.250494+00
Date Added: 2024-06-11T17:42:54.528060
License: Public Domain

CORNELIA G. KENNEDY, Circuit Judge,
dissenting.
Because I find the evidence insufficient as a matter of law to support a “clear showing” that Fleck acted maliciously to cause the breach of Blankenship’s contract to pay a broker’s commission to the Brokers, I dissent.
The majority does not deal with the causation portion of this requirement since Fleck in his statement of issues presented framed the question as: “Is there a ‘clear showing’ of malice on the part of Defendant Fleck which is required to support a judgment under Tennessee Code Annotated § 47-15-113?” Although the issue should have been more clearly stated, Fleck has in his brief argued that no malicious acts of Fleck caused Blankenship to breach the contract for the commission. I,- therefore, believe that we may review , whether there was anything that Fleck did with malice which induced Blankenship to breach his agreement with- the Brokers.
Blankenship testified unequivocally that he did not know of any statements by Fleck to induce him to breach the contract. Rather, he believed he owed a broker’s commission only if the sale was consummated according to the terms set forth in the original brokerage agreement. The District Court was not, of course, required to accept this testimony. But since it was unimpeached, the Court was required to consider it together with the other testimony in the case.
The District Court appears to have been under the impression that Fleck had some obligation to structure his offer to the purchaser so that there would be cash to pay the Brokers their commission. Under the original offer Fleck would have purchased the hotel and the members of the limited partnership which owned it would have shared pro rata in the purchase price. That sale would have provided cash from which to pay the commission. Under the restructured deal Fleck purchased 49% of the limited partners’ interest and took an option to purchase the additional interests of the limited partners (but not all) and the interest of the general partner. Because the partnership had debts unrelated to the hotel property and the partnership interest had to be conveyed free of those debts, Blankenship needed what cash there was in the deal to pay those debts. The cash was further reduced by a loan Fleck had made to Blankenship. The District Court recognized that Fleck was primarily motivated by financial considerations. However, it found that “in view of the pressing circumstances surrounding Fleck in the spring of 1980 due to his own selfish need to produce the Hilton for himself and his syndicators, as well as a shortage of cash flow at the closing, Fleck clearly had an intention to cause a breach of the brokerage contract if that is what it took to close the transaction.” The fact that Fleck had compelling reasons to close the deal may have given him a reason to' induce Blankenship not to pay the commission. However, the Court has found that Fleck continued to offer essentially the same deal that he had always offered although for less than the entire property. To the extent that there was less cash from which Blankenship could pay. the commission, it was because only 49% of the partnership’s interest in the property was-being purchased and because Blankenship had to pay off certain partnership debts, in order to utilize the partnership sale method rather than an outright sale of the hotel, and not because Fleck had changed the amount of his offer. It was undisputed that only 49% of the partnership interests could be purchased initially. If 50% or more were purchased the partnership would have been dissolved *235and the due on sale clause triggered. There is absolutely no basis for finding that Fleck restructured his offer or offered less cash so that Blankenship would not pay the commission.
The District Court found that Fleck’s agreement to indemnify the seller for a portion of the brokerage fees for which the seller might later be held liable exhibited a blatant disregard for the rights of the Brokers. The majority agrees that this evidence is probative of malice. I am at a loss to understand their logic. Fleck was buying partnership interests and the partnership of which Blankenship was general partner would be liable for the commission if Blankenship did not pay it. Blankenship agreed that he would pay the first $225,-000, the proportion of the commission which could be attributed to the sale of 49% of the partnership which was then taking place. If Fleck exercised the option to purchase the additional 24% interest of the West Side Inn Group (which he had at the time of trial), Blankenship agreed that again he would pay any commission due the Brokers for that sale. Above that Blankenship and Fleck agreed to share SO-SO any commission which might be due or become due. Since Fleck had until 1995 to exercise his option to purchase the general partner’s interest and had no option to purchase the balance of the partnership nor any obligation to do so, the sharing of the obligation to pay a commission on that contingency could not encourage Blankenship not to pay the. commission which the court found was due.1 The only part of Blankenship’s obligation for which Fleck agreed to indemnify Blankenship was for a possible commission on a remote future transaction which Fleck might or might not engage in. Indeed, Fleck testified that it was unlikely he would purchase the remaining 24% in the partnership since those partners wanted him to pay some tax liabilities that they would incur if they sold their partnership interests which were greater than they would have paid if the hotel had been sold.
Both the District Court and majority rely on certain statements which Fleck made as evidence of his malice and his intent that the transaction should not provide for a broker’s fee. When each of these statements is examined in context, they do not establish the clear showing' of malice required.
The statement by Mr. Fleck that there was no room in the deal for the Brokers was made to Mr. Burrows. Burrows, who was a friend of Fleck, went to see Fleck to see if he would do something to help the Brokers get their fee or pay the commission from his side of the deal. It was in response to that request Fleck stated that there was nothing in the deal for the Brokers. Fleck had no obligation to pay the commission nor to do anything to help the Brokers collect their commission from Blankenship. One does not cause another to breach a contract because he fails to use his efforts to get the other to perform or fails to modify his offer so that the commission can more easily be paid.
That Fleck said “f — k the brokers” and that Fleck said he would ruin the Brokers’ reputations nationwide and put them out of business if they tried to delay the closing was testified to by various witnesses. First, Wilson Viar, one of the plaintiffs, testified that Martin Grusin, Blankenship’s attorney in the negotiations, said that Ed Fleck made these statements. Marin Grusin then testified as to the circumstances under which the statement “f — k the brokers” was made. Grusin had arranged a meeting of all concerned partners to try to work out the deal that was ultimately consummáted. Grusin wanted to wait until the Brokers (who were late) had arrived so that he would have to explain his proposal *236only once. Fleck, on the other hand, was impatient that Grusin tell him what the deal was that he proposed. It was in response to Grusin’s request to delay that Fleck made his statement. The statement indicates impatience and also that Fleck was not concerned about the Brokers but not a malicious intent to have Blankenship breach his contract with them. Fleck denied having made such a statement. He testified before Grusin and was not asked about the circumstances described by Grusin.
Grusin in his testimony denied that Fleck had said that he would ruin the Brokers if they interfered with the deal. He testified that what Fleck had actually said was: “Look, brokers are not deal killers, they are deal makers. Good broker gets a representation [reputation], or if he breaks a deal, deal killer, then he won’t get.any business. A broker needs to have representation as a deal maker. He gets the transaction done, not one that — one that helps, not one that hinders.” But if one accepts Viar’s testimony and finds that Grusin was more accurate in what he told Yiar than what he told the court, there is nothing that tends to show Fleck maliciously induced Blankenship to breach his contract. The Brokers did not have a right to prevent the transaction from going forward merely because they had not been paid their commission. Fleck was entitled to complete the purchase if Blankenship was willing to go forward with it. .Once again, only if Fleck had some duty to help the Brokers collect their commission would he in saying the above have done anything to cause Blankenship to breach the commission contract.
. The District Court made no specific finding as to the manner in which Fleck caused Blankenship to breach his' agreement to pay the Brokers a commission. A careful review of the record discloses nothing.
Because the record contains no evidence that Fleck maliciously caused Blankenship to breach the contract, I would reverse.

. It must be kept in mind that Blankenship was acting on behalf of the partnership when making the agreement to pay a commission. Fleck was purchasing that partnership and if a commission was due, the partnership would have to pay. It defies reason that Fleck would induce Blankenship not to pay the commission from the funds he and the old partners received and expose the partnership he was purchasing to that liability.