Supreme Court Seal
South Carolina
JUDICIAL DEPARTMENT
Site Map | Feedback
2009-UP-062 - Retail Properties v. Horne Properties

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Retail Properties, Inc., Respondent,

v.

Horne Properties, Inc., Appellant.


Appeal From Richland County
 Alison Renee Lee, Circuit Court Judge


Unpublished Opinion No. 2009-UP-062
Heard January 6, 2009 – Filed January 28, 2009   


AFFIRMED


Louis H. Lang and Ian D. McVey, of Columbia for Appellant.

James A. Blair, III, of Greenville for Respondent.

PER CURIAM:  Horne Properties, Inc. (Horne) appeals from a jury verdict finding Retail Properties, Inc. (RPI) entitled to damages of $132,813 for Horne’s breach of its contract with RPI.  We affirm.

FACTUAL/PROCEDURAL HISTORY

This matter involves an admitted contract between RPI and Horne, wherein RPI agreed to represent Horne as a preferred grocery-anchored shopping center developer in certain South Carolina counties.  RPI sued Horne after Horne failed to pay RPI under the contract for site acquisition services rendered after Horne developed a Publix at the intersection of Broad River Road and Kennerly Street in Columbia. 

RPI is a company formed by Tim Metzler that specializes in tenant selection. Metzler had previously worked for a company which developed large shopping centers, such as Wal-Mart.  When Metzler left employment with that company, multiple clients, including Publix Super Markets, requested Metzler continue to represent them.  Metzler testified these chains would engage tenant representation firms to explain the nuances of the market, traffic patterns, and demographics and come up with a strategy for possible markets.  Metzler stated the tenant representation role is different from a broker, who represents the buyer or the seller in a transaction.  A tenant representation firm educates the tenant on where to go; they help create a plan, they create the submarkets, and they find opportunities. 

Publix engaged RPI to initiate the move of Publix stores into South Carolina.  As part of this representation, Publix asked RPI to interface with fifteen or twenty different developers over time.  Based on longstanding relationships with developers, Publix may request the tenant representation firm work with particular developers.  In 2000, Publix requested RPI expand its areas of responsibility into Columbia and five counties in the Upstate.    After driving around Columbia, Publix’s real estate manager, Bob Burkett, and Metzler identified five market opportunities.  At that time one of those developers, Horne, was soliciting business from Publix.  Based on a relationship Burkett had with William Hanks, a real estate manager for Horne, Burkett asked that RPI work with Horne when an opportunity arose.  Once Metzler, Burkett and Hanks identified some specific intersections of interest, the president of Horne, Richard Pressley, joined them in looking at the Columbia and Upstate areas.  According to Metzler, this business relationship ultimately resulted in RPI and Horne entering into a Fee Schedule agreement on March 2, 2000. 

The agreement between RPI and Horne provided as follows:

Retail Properties, Inc. and Horne Properties

Fee Schedule

Retail Properties, Inc. (RPI) agrees to represent Horne Properties as a preferred grocery-anchored shopping center developer in the following South Carolina counties:

Richland  Anderson Greenville Pickens
Lexington Cherokee Spartanburg  

Retail Properties’ assignment is to assist Publix Super Markets in improving their market share in the above markets.  Whenever there is an opportunity for a developer to be involved in a shopping center, it will be presented to Horne Properties.  As consideration for being a preferred shopping center developer, Horne Properties agrees to the following compensation agreement for RPI.

Site Acquisition
For each property purchased, a fee of $3.00 per sq. ft. on Publix GLA to be paid to RPI by the Seller and/or the Buyer at closing.

The document originally submitted by RPI to Horne contained additional services RPI could offer to Horne in exchange for additional fees and commissions, including assisting Horne with any joint ventures, Publix leases, and additional tenant leases.  However, these optional services were not desired by Horne and, as a result, the parties struck through all of these other services.  The document also originally provided under the site acquisition that RPI be compensated “a fee of 5% to be paid by the Seller and/or Buyer at closing with a $75,000 guaranteed minimum per single transaction and $100,000 guaranteed minimum per assemblage transaction,” but this language was modified to provide for the $3 per square foot of gross leasable area compensation, an industry standard.  Thus, the compensation for site acquisition work “went from a percentage to a flat fee.”  Additionally, language under the site acquisition proposal providing Horne would “guarantee a minimum fee of 2% of the purchase price to be paid to RPI” for the sale/purchase of shopping centers was struck through by the parties.    Pressley’s instructions to Metzler were “to go find dirt” that Horne could own and Horne was going to “develop it from the ground up.” 

Working under this agreement, Metzler testified RPI’s task with regard to site selection was to identify submarkets, further identify intersections, to help in a site selection process and, once everyone was in agreement on the site selection for a possible Publix, to go find the next site.  As site selector, RPI was to present all available opportunities to Horne and if the opportunities could be developed, assist them in the process.  Once an agreement was reached on site selection, Horne was responsible for continuing on the path to erect a Publix.  According to Metzler, RPI was to be compensated under the agreement “if we complete a site acquisition and identify a site.”  In order to complete the site acquisition, RPI would “filter all the information,” “go down to the intersection,” “do the work on the submarket,” and if Publix agrees to locate at that site, RPI would provide introductions to all the property owners.  Metzler testified, “[O]nce the initial meetings are completed we are out of the picture, and on to the next site.”  To achieve the final site acquisition, the developer would contract for the property and build a shopping center.  As a site selector, RPI would not be involved in the development of the property. 

In regard to the property that is the center of this dispute, Metzler and Burkett narrowed their search down from a submarket in the area to the particular intersection of Broad River and Kennerly.  At this time, RPI was under its agreement with Horne. The northwest corner was listed by the company Edens & Avant.  Metzler began to contact the owners of property on the northeast corner and discovered another developer, Joe Gentry, had title to one small parcel and held options to purchase all the other properties necessary for development of that corner.  At the instruction of Publix and Horne, Metzler approached Gentry with the opportunity to sell the property to Horne at a profit, but Gentry declined because he wanted to develop the property for Publix himself.  Publix instructed RPI to get both sides of property under contract so that both developers could present packages to Publix.  RPI then provided its full packet of information and research on the area to both developers.  The packages were submitted to Burkett, and he chose to present the northeast corner that Gentry had under contract for consideration by Publix.  Metzler testified that in 2000, an opportunity existed for Horne on the northwest corner, but there was no opportunity at that time for Horne as to the northeast corner that Gentry had under his control.  Both of the packages were ultimately rejected by Publix. 

Publix has a written rule whereby no one is allowed to resubmit a property site for consideration for at least one year.   In the spring of 2001, Philip Greenwall with Publix began traveling with Metzler in South Carolina and reviewed the areas looked into previously by Burkett and Metzler.  While looking at the northwest corner of Broad River and Kennerly that had been submitted again by a different developer, Greenwall indicated he liked the northeast corner better.  Greenwall suggested RPI get Horne involved in the northeast corner, so Metzler contacted Hanks and Pressley, who then instructed RPI to go back to the northeast corner and contact the property owners.  By this time, Gentry had dropped his options on the northeast corner.  Metzler contacted all of the property owners, who directed him to Tom Efland, one of the owners who was also acting as a representative for the other property owners. 

At the instruction of Hanks and Pressley, Metzler made arrangements for a meeting with Horne and Efland.    Metzler, Hanks and Pressley met with Efland at his office on July 11, 2001 and discussed the site, terms and conditions, and the possibility of putting the northeast corner under contract with Horne.   After the meeting, Metzler was told his work was finished on that job, that Horne would handle the negotiations with the property owners, and that RPI would be compensated. Pressley and Hanks then instructed Metzler to move onto another site in the Upstate. 

Approximately two months later, Horne sent RPI a termination letter dated September 13, 2001, stating it had come to Horne’s attention RPI was representing other developers in the seven counties listed in the agreement and, because of this conflict of interest, Horne was terminating their agreement.  Metzler testified, while Horne was free to terminate the agreement at any time, RPI made full disclosure to Horne that it worked with other developers, sending out periodic reports which included information regarding RPI’s work with all the developers.  Horne entered into a contract with Efland for his piece of property on September 25, 2001.    Ultimately, of the several projects on which RPI worked, Horne closed on two properties after the termination letter, including the northeast corner of Broad River and Kennerly.  While Horne paid RPI for the other project, it refused to pay on the Broad River and Kennerly one.  RPI presented evidence the gross leasable square footage of the Publix Horne subsequently developed at this location was 44,271. 

Pressley, testifying on behalf of Horne, maintained RPI’s duties under the agreement were to negotiate land contracts and help their personnel produce market data and trade area statistics, including population, household income, income per capita, new housing starts, current housing and schools.  Pressley stated Horne terminated its agreement with RPI because (1) RPI was working in the same market with other grocers, thereby potentially jeopardizing a relationship with Publix, (2) RPI had “other competitive developer relationships,” and (3) RPI failed to pursue the land contracts to the degree Horne had originally hoped.   Pressley testified to the various meetings and negotiations Horne had with the different landowners in regard to the northeast corner property.   He did not recall any meeting with Efland where Metzler was present.  Contracts were negotiated on the various properties in question for a period of around eight months, starting in late September 2001.   Pressley testified, had RPI still been representing Horne during that time, Horne would have expected RPI to be involved with these negotiations and execution of the contracts.  A Publix grocery store was subsequently constructed on the property and opened in November or December 2003.  Pressley testified no payments were made to RPI at the closing on this property because “there were none due.” 

When asked where in the agreement between the parties it provided RPI was supposed to negotiate land options with the property owners, Pressley stated RPI was a brokerage company, and it was inherent in the term “represent” and under the paragraph entitled “Site Acquisition.”   Pressley further admitted he struck through many of the services offered by RPI, including those relating to additional tenant lease, Publix lease, and joint venture arrangement, and that he changed the compensation under site acquisition to the $3 per square foot of Publix gross leasable area to be paid by the seller and/or buyer at closing.  When questioned on whether there was a specific list of tasks RPI was required to perform in order to earn a commission, Pressley again stated that it was “inherent in that document.”  Pressley admitted, however, that RPI had no authority to bind Horne in contracts. 

Prior to submission of the case to the jury, counsel for Horne submitted four requests to charge in the area of commissions, arguing the contract in question was in the nature of a brokerage fee agreement.  Counsel stated, “[a]lthough there is a flat fee suggested,” that flat fee depended on whether there was a land contract commission.   Specifically, Horne sought the following instructions be given to the jury:

1.  A broker is entitled to his commissions, if during the continuance of his agency, he is the efficient or procuring cause of the sale.

2.  A broker will be regarded as the procuring cause if his intervention is the foundation upon which the negotiations resulting in the sale is begun.

3.  It is the emphatic rule in this state that the broker must not only show that his efforts were the procuring cause of the sale but must further show that his intervention was during the continuance of an agency to sell or to find a purchaser.

4.  A broker is never entitled to a commission for unsuccessful efforts.  The risk of failure is wholly his.  The reward comes only with his success.  The broker may devote his time and labor, and expend his money with ever so much devotion to the interests of his employer, and yet if he fails, if without effecting an agreement or accomplishing a bargain, he abandons the effort, or his authority is fairly and in good faith terminated, he gains no right to commission.

The trial court declined to instruct the jury on these four charges finding, “whether you call it a commission, whether you call it a fee . . . the bottom line is. . . whether or not [RPI] did what [it] was supposed to do under the terms of the contract,” it was a contract for services and not land acquisition, and it was not a procuring cause issue and thus it was unnecessary to bring in “procuring cause or anything along those lines.”   The jury returned a verdict for RPI in the amount of $132,813, and Horne moved for a new trial based on the court’s failure to give the requested instructions.    The trial court denied the motion, and this appeal followed.

ISSUES

1.  Did the trial court err in concluding the fee schedule between the parties was a contract for services for a flat fee because the fee schedule clearly called for payment of a commission if earned?

2.  Did the trial court err in failing to charge the jury the law as to procuring cause because the issue in the case was the entitlement of RPI to a commission?

STANDARD OF REVIEW

An action for breach of contract seeking money damages is an action at law.  Eldeco, Inc. v. Charleston County Sch. Dist., 372 S.C. 470, 476, 642 S.E.2d 726, 729 (2007).  In an action at law, on appeal of a case tried by a jury, the jurisdiction of the appellate court extends merely to the correction of errors of law.  Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 85, 221 S.E.2d 773, 775 (1976).

LAW/ANALYSIS

On appeal, Horne asserts the trial court erred in concluding the fee schedule agreement was a contract for services.  It argues that RPI is a real estate broker that was engaged by Horne to represent it in Horne’s attempt to develop Publix grocery stores.  Horne points to the fact that RPI often referred to its compensation under the agreement as a commission, and argues the $3 per square foot of leased space language met the definition of commission and, as such, RPI could only earn a commission if it was the procuring cause of the transaction.  Accordingly, Horne contends the trial court erred in failing to charge the jury on the law that in order to earn a commission, one must be the efficient or procuring cause of the transaction.  We disagree.

The trial judge is required to charge only the current and correct law of South Carolina, and the law to be charged to the jury is determined by the evidence adduced at trial.   State v. Taylor, 356 S.C. 227, 231, 589 S.E.2d 1, 3 (2003).  To warrant reversal for refusal to give a requested instruction, the refusal must have not only been erroneous, but also prejudicial.    McCourt ex rel. McCourt v. Abernathy, 318 S.C. 301, 306, 457 S.E.2d 603, 606 (1995).  Refusal to give a properly requested charge is not error if the general instructions are sufficiently broad to enable the jury to understand the law and the issues involved.  Id.    

In arguing its position, Horne relies heavily on the case of Webb v. First Fed. Sav. & Loan Ass’n, 300 S.C. 507, 388 S.E.2d 823, overruled in part on other grounds by Myrtle Beach Hosp., Inc. v. City of Myrtle Beach, 341 S.C. 1, 532 S.E.2d at 868 (2000).  There, Webb, a real estate broker, attempted to broker a real estate deal for First Federal to sell certain property to Burger King for $155,000, and an agreement was reached with First Federal that Webb would receive a $15,000 commission.  The offer was made to Burger King, but Burger King declined.  Id. at 509, 388 S.E.2d at 824.  Sometime thereafter, Burger King asked Webb to contact First Federal about the lot, and when Webb did, he was told it was not available.  Approximately six months later, Burger King again asked Webb to approach First Federal about the availability of the lot.  First Federal indicated it had decided to do nothing with the property.  However, two months later, First Federal began negotiating with a franchisee of Burger King.  Three months after that, a subsidiary of First Federal leased the property to the franchisee, and a Burger King was subsequently erected there.  Id. at 509, 388 S.E.2d at 825.  When Webb noticed construction of the restaurant, he brought an action against First Federal alleging he was entitled to compensation based upon quantum meruit and implied contract.  Id. at 508, 509, 388 S.E.2d at 824, 825.  Reciting the same law Horne sought to be instructed to the jury in requests number three and four regarding entitlement to commissions and procuring cause, this court noted the unappealed ruling in the matter that the actual contract between Webb and First Federal had ended when Burger King refused the initial offer, and determined the facts of the case did not support a contract implied in law.  Id. at 512-13, 388 S.E.2d at 826.

We find the Webb case to be clearly distinguishable.  In the case at hand, RPI sought recovery for breach of the parties’ written contract, not under the theory of an implied contract.  Further, the evidence adduced at trial shows RPI was not acting simply as a real estate broker attempting to secure a deal between parties for the sale of land.  Rather, as testified to by Metzler, RPI acted as a tenant representative, whose role is different from a broker who represents the buyer or the seller in a transaction.  Metzler testified RPI’s task with regard to its site selection duties for Horne was to identify submarkets, further identify intersections, help in a site selection process and, once everyone was in agreement on the site selection for a possible Publix, to go find the next site.  According to Metzler, RPI fulfilled these duties with respect to the Broad River and Kennerly location, and was instructed by Horne to move onto the next site.  Although Pressley disagreed that RPI fulfilled its duties as to this site, Horne presented no evidence that RPI was not engaged to perform those tasks to which Metzler testified, and whether Metzler fulfilled those duties under the contract was a question for the jury.  Under the agreement between the parties, Horne Properties agreed to compensate RPI for performing site acquisition on each property purchased, the fee being determined based on the square footage of the Publix thereafter erected.  While it is obvious the fee due could not be computed unless and until a Publix was actually erected on the location in question, neither this fact, nor the fact that the parties may have referred to the expected compensation as a commission establishes that RPI was acting merely as a broker, nor was there any evidence of record that RPI acted merely as a broker.  Further, the trial court instructed the jury on basic contract law, including that in order for the contract to be binding and enforceable, the parties must have intended to enter a contract and, through their negotiations, they must have reached a mutual understanding of the terms of the contract. 

We agree with the trial court that the evidence submitted at trial shows the contract between the parties was not simply one for land acquisition entitling RPI to only a brokerage fee, but was a contract for services, with a flat fee to be determined upon the successful completion of a Publix on the site upon which RPI performed those services.  Accordingly, we hold the trial court properly declined to charge the jury on the law relating to commissions and procuring cause as requested by Horne.  See Miller v. Schmid Labs., Inc., 307 S.C. 140, 142-43, 414 S.E.2d 126, 127 (1992) (noting instruction by the trial court of irrelevant and inapplicable principles of law was clearly erroneous and may have served to confuse the jury, and holding it is reversible error to charge a correct principle of law as governing a case when such principle is inapplicable to the issues on trial).  See also Cole v. Raut, 378 S.C. 398, 404, 663 S.E.2d 30, 33 (2008) (noting a jury charge consisting of irrelevant and inapplicable principles may confuse the jury and will constitute reversible error if the jury’s confusion affects the outcome of the trial).  Further, assuming, as Horne contends, there is evidence that work performed by RPI fell within the definition of a real estate broker, the issue of the parties’ obligations under the contract was a question for the jury.  Thus, we find the general instructions given by the trial court were sufficiently broad to enable the jury to understand the law and the issues involved such that failure to give the requested charges was not error.

CONCLUSION

For the foregoing reasons, the judgment below is

AFFIRMED.

HUFF, THOMAS, and LOCKEMY, JJ., concur.