Court Opinion

ID: 2792145
Source: CourtListenerOpinion
Date Created: 2015-04-08 19:00:58.715923+00
Date Added: 2024-06-11T12:21:45.257666
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 14-1454

JONES LANG LASALLE AMERICAS, INC., a Maryland corporation,

                Plaintiff - Appellant,

           v.

THE HOFFMAN FAMILY, LLC, a        Virginia    limited liability
company; HOFFMAN BUILDINGS,       L.P., a      Virginia limited
partnership,

                Defendants - Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.     Anthony J. Trenga,
District Judge. (1:13-cv-01011-AJT-JFA)

Argued:   January 28, 2015                   Decided:   April 8, 2015

Before SHEDD, DUNCAN, and KEENAN, Circuit Judges.

Reversed and remanded by unpublished opinion.       Judge Duncan
wrote the opinion, in which Judge Shedd and Judge Keenan joined.

ARGUED: Stephen Michael Sayers, HUNTON & WILLIAMS LLP, McLean,
Virginia, for Appellant.   John Donley Adams, MCGUIREWOODS LLP,
Richmond, Virginia, for Appellees. ON BRIEF: Thomas J. Cawley,
Julie M. Peters, HUNTON & WILLIAMS LLP, McLean, Virginia, for
Appellant.  Jodie N. Herrmann, Charlotte, North Carolina, Brian
D. Schmalzbach, MCGUIREWOODS LLP, Richmond, Virginia, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.

                                2
DUNCAN, Circuit Judge:

        Plaintiff-Appellant        Jones        Lang       LaSalle    Americas,       Inc.

(“JLL”), appeals the district court’s entry of summary judgment

in favor of Defendants-Appellees The Hoffman Family, LLC, and

Hoffman    Buildings,       L.P.    (collectively,            “Hoffman”),      on     JLL’s

breach of contract claim.            JLL claims that Hoffman owes it $6.62

million in commission payments under a contract in which JLL

agreed    to   help   Hoffman      secure       a   federal    government      lease    in

exchange for a percentage of the tenant’s base rent.                          On appeal,

JLL argues that the district court erred in concluding that a

JLL employee involved in the leasing efforts was required to

have a Virginia real estate salesperson’s license, and that the

consequence of the employee’s failure to be so licensed was a

total    forfeiture    of    JLL’s    commission.             For    the    reasons   that

follow, we reverse the district court’s determination that, as a

matter of law, JLL was precluded from recovering any commission

under the lease agreement, and remand for further proceedings.

                                           I.

                                           A.

        JLL is a real estate business that, at all times relevant

here, had a firm license issued by the Virginia Real Estate

Board.      Hoffman    owns   tracts    of          real   property    in    Alexandria,

Virginia.      In August 2007, Hoffman and JLL signed a leasing

                                            3
agreement (the “Agreement”).                In the Agreement, Hoffman retained

JLL to act as the exclusive leasing agent for landholdings that

included property located at 2401 Eisenhower Avenue, Alexandria,

Virginia       (the    “Property”).          Section      4.12     of    the       Agreement

addressed       JLL’s        services      directed      towards        obtaining      U.S.

Government leases for Hoffman.                    This section required JLL to,

inter     alia,       “[a]ssist     with     the      development       of    an    overall

strategy       for      positioning        the       Property    for         site/building

selection by the Government” and “[a]ssist in the negotiation of

the   [Government]          lease   award    to      [Hoffman].”        J.A.    39.      The

Agreement also provided that, if JLL’s efforts resulted in the

lease of any of these properties, JLL would be entitled to a

commission equal to 2% of the lease’s base rent.

        JLL assembled a Government Investor Services (“GIS”) group

to    identify        and    pursue     federal       leasing      opportunities        for

Hoffman.       As a part of that effort, JLL hired Arthur M. Turowski

after he retired from the U.S. General Services Administration

(“GSA”) in or around October 2007.                       J.A. 483-85.           JLL hired

Turowski to advise JLL’s GIS team on matters related to the GSA

and the federal lease procurement process.                       Turowski was not a

licensed Virginia real estate salesperson when he joined the GIS

team,    and    he     did    not   obtain       a   salesperson’s       license      while

employed by JLL.            J.A. 486-87.

                                             4
        On April 7, 2011, the GSA solicited Expressions of Interest

(“EOI”)    for     a    lease   for    a   site   to   house   the    new    national

headquarters of the National Science Foundation (“NSF”).                             JLL

identified the Property as a candidate for the NSF lease and

assisted Hoffman in presenting the Property to the GSA.

     The GSA selected Hoffman for the award of the NSF lease on

May 15, 2013.           On May 23, 2013, Hoffman signed the NSF lease,

and on June 7, 2013, the GSA delivered the signed NSF lease to

Hoffman and issued a public announcement of the award.                        Hoffman

will receive a total base rent of more than $330 million over

the 15-year term of the NSF lease.                J.A. 19.

                                           B.

     The parties began disagreeing over JLL’s commission shortly

after the NSF lease was signed.                   JLL claimed that, under the

Agreement, Hoffman owed JLL a commission equal to 2% of the NSF

lease’s     base       rent,    an    amount    totaling     approximately      $6.62

million.     Hoffman asserted that it owed JLL a total commission

of $1 million, based on what it claimed were oral agreements

reflected in written submissions made to the GSA and elsewhere.

The parties were unable to resolve this dispute, and JLL filed

an action for breach of contract on August 16, 2013, seeking

$6.62    million       in   commission     payments.       During    the    course    of

discovery, Hoffman learned that Turowski was not a licensed real

estate salesperson.

                                            5
       Both parties moved for summary judgment.                          JLL claimed that

it    was    entitled      to    recover         the    commission     set     forth    in    the

Agreement because JLL procured the NSF lease and the Agreement

was    in    effect       during      the    course       of   JLL’s     leasing       efforts.

Hoffman argued in relevant part that, as a matter of public

policy, JLL could not recover any commission that might have

been payable under the Agreement because Turowski, an unlicensed

real    estate      salesperson,            was    critical     to     JLL’s    NSF    leasing

efforts.

       The    district       court        granted       Hoffman’s     motion    for     summary

judgment.         The court first concluded that Turowski was required

to    have    a    real    estate         salesperson’s        license    because       he    was

centrally         involved      in    the    activities        that     led    to    Hoffman’s

successful bid for the NSF lease.                          As to the consequences of

that requirement, the district court concluded “based on public

policy declared by the Virginia courts” that “Turowski’s failure

to have a license preclude[d] JLL[], as well as Turowski, from

receiving any commission with respect to the NSF lease.”                                     J.A.

193.    JLL timely appealed.

                                                  II.

       We review de novo a district court’s grant of a motion for

summary judgment, construing all facts and making all reasonable

inferences         in   favor        of    the     non-moving        party.         Millennium

                                                   6
Inorganic Chems. Ltd. v. Nat’l Union Fire Ins. Co., 744 F.3d

279, 285 (4th Cir. 2014).                Summary judgment is appropriate only

when the moving party shows that “there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a

matter of law.”            Fed. R. Civ. P. 56(a).

                                            III.

       JLL    argues       on   appeal   that       the   district     court        erred    in

concluding      that       Turowski’s     participation         in    the     NSF    leasing

efforts rendered the Agreement unenforceable on public policy

grounds,       and      consequently,        in      determining           that     JLL     was

prohibited       from       receiving    any       commission      payable        under     the

Agreement as a matter of law.               We agree.

       Neither       JLL    nor   Hoffman    dispute       that      the    Agreement       was

valid when formed.              Instead, Hoffman contends that JLL performed

its    contractual         obligations    in       contravention       of    the    Virginia

real       estate     licensing      scheme--and          therefore         rendered        the

Agreement      unenforceable--when           Turowski,       who      did     not    have     a

salesperson’s license, became involved with the transaction. 1                               We

find this argument unpersuasive because it is unsupported in

       1
       Hoffman so argues because it submits that “Turowski’s
extensive participation in the NSF lease transaction rendered
him a ‘real estate salesperson’ in Virginia,” and therefore
required him to be licensed as such. Appellee’s Br. at 17.

                                               7
Virginia law.      As an initial matter, the district court imposed

a total forfeiture of JLL’s commission “based on public policy

declared by the Virginia courts” despite the fact that “[t]here

is   no    explicit     statute    or    judicial    decision   that     [would]

impose[]     [a   total    prohibition        of   JLL’s   commission]    under

Virginia law.”         J.A. 193.        Likewise, Hoffman can point to no

authority under Virginia law that would compel a forfeiture of

JLL’s commission under the circumstances presented here.                  Absent

Virginia cases addressing this issue, we decline to speculate

whether Virginia courts would so hold.

     While the Supreme Court of Virginia has not addressed the

enforceability of validly formed contracts performed contrary to

Virginia’s real estate licensing scheme, Virginia law is clear

on two points.        First, “a contract made in violation of the real

estate licensing statutes is illegal” and unenforceable. 2                Grenco

     2
       The Supreme Court of Virginia first addressed the issue of
commission payments to unlicensed brokers and salespersons in
Massie v. Dudley, refusing to enforce an agreement “made by an
unlicensed person” because “its substance [was] unlawful.”      3
S.E.2d 176, 180-81 (Va. 1939).       The court has consistently
reiterated this principle following Massie.       In Harrison &
Bates, Inc., v. LSR Corp., for example, the court held
unenforceable a contract to split commissions made between a
licensed corporation and an unlicensed firm.      385 S.E.2d 624
(Va. 1989); see also Hancock, Co. v. Stephens, 14 S.E.2d 332,
334 (Va. 1941) (holding unenforceable a contract for real estate
commissions formed by an unlicensed corporation); State Realty
Co. v. Wood, 57 S.E.2d 102 (Va. 1950) (holding unenforceable a
real estate contract that provided for the payment of brokerage
fees to an unlicensed corporation).

                                          8
Real       Estate    Inv.    Trust    v.     Nathaniel       Greene   Dev.    Corp.,     237

S.E.2d       107,    109     (Va.    1977)    (emphasis       added).        And    second,

Virginia “courts are averse to holding contracts unenforceable

on the ground of public policy unless their illegality is clear

and    certain.”           Wallihan    v.    Hughes,     82    S.E.2d   553,       558   (Va.

1954).       On this latter point, the Supreme Court of Virginia has

reasoned that, though “[p]ublic policy has its place in the law

of contracts, . . . that will-o’-the-wisp of the law varies and

changes       with     the     interests,          habits,    need,     sentiments       and

fashions of the day,” id., and courts are thus wary of employing

it to invalidate contracts that were valid when formed.                              In the

absence of clear Virginia law standing for the proposition that

a validly formed contract for real estate commissions can later

become unenforceable through unlawful performance, we decline to

hold the validly formed Agreement unenforceable as a matter of

law on the grounds of public policy. 3

       3
       In light of this determination, and because the parties
agree that Turowski’s involvement in the NSF leasing efforts
began over a month after the Agreement’s valid formation, we
need not decide whether Turowski was required to have a
salesperson’s license.    Moreover, Virginia’s General Assembly
has delegated the authority to regulate the real estate
profession to the Virginia Real Estate Board. See Va. Code Ann.
§ 54.1-2105. Pursuant to this authority, the Board is empowered
to police unlicensed real estate activity by, inter alia,
issuing cease and desist orders and imposing civil penalties.
Id. § 54.1-2105.2(A), (C).    Thus, if Turowski was required to
have a salesperson’s license in order to participate in JLL’s
(continued)
                                               9
       To    be    clear,   our    conclusion      does    not   purport   to   decide

whether      JLL    is   entitled    to     the    $6.62   million   in    commission

payments it seeks.           We hold only that Turowski’s participation

in     the   NSF     leasing      efforts    did     not   render    the    Agreement

unenforceable as a matter of public policy.                      With this question

of law resolved, we return the matter to the district court to

resolve the legal and factual issues that remain in dispute,

including whether “the parties agreed to a $1 million commission

with respect to the NSF lease” in an oral agreement.                        J.A. 178

n.3.

                                            IV.

       For the foregoing reasons, the judgment of the district

court is reversed and this matter is remanded to the district

court.

                                                             REVERSED AND REMANDED

NSF leasing efforts, it is within the Board’s discretion                           to
determine the consequences of that unlicensed activity.

                                            10