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2011-UP-266 - C. S. E. Enterprises v. Lemons

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

C. S. E. Enterprises, Inc., d/b/a/ RE/MAX at the Coast and Tom Naomi, Appellants,

v.

Scott L. Lemons and Gold Coast Resorts, LLC, Respondents.


Appeal From Horry County
Ralph P. Stroman, Master-in-Equity


Unpublished Opinion No. 2011-UP-266   
Heard December 9, 2010 – Filed June 7, 2011


AFFIRMED AS MODIFIED


Philip Coleman Thompson, of Conway, for Appellants.

Thomas C. Brittain, Mary Madison B. Langway, and Andrew Preston Brittain, all of Myrtle Beach, for Respondents.

PER CURIAM: C.S.E. Enterprises, Inc., d/b/a RE/MAX at the Coast and Tom Naomi (collectively Naomi) appeal the order of the interim master holding Naomi was not entitled to a real estate commission.  We affirm. 

FACTS/PROCEDURAL HISTORY

Scott Lemons secured an option to purchase a fifteen-acre tract of waterfront property from John Delduco.  Although Lemons was a realtor, he contacted Naomi, a real estate agent for RE/MAX at the Coast, about marketing the property.  On September 27, 2006, Lemons and Naomi executed a listing agreement which provided Lemons would pay Naomi a commission of ten percent of the gross selling price if Naomi procured "a party ready, willing and able" to purchase the property.  The next day the parties executed a similar agreement, which provided a more detailed description of the property and set the selling price as $3,400,000. 

In October, a potential purchaser, Kenny Hyatt, contacted Naomi about the property.  Hyatt executed a buyer agency contract and a dual agency agreement with Naomi on October 28, 2006.  He then made an offer on the property for $2,900,000, which Lemons accepted that same day.  When Lemons signed the purchase agreement, he also hand-wrote and signed an agreement, which provided:  "I Scott Lemons agree to pay RE/MAX at the Coast (Ref. Tom Naomi) a 10% commission upon close of the referenced prop. on the waterway approx. 15 ac. with contract for/with Kenny Hyatt."  The purchase agreement contained no contingencies and provided for a closing date of November 23, 2006. 

Hyatt had intended to immediately resell (flip) the property.  When he was unable to find a buyer, he refused to close on the property.  Because Hyatt refused to close, Lemons did not exercise his option to purchase the property.  On December 19, 2006, Naomi brought this action against Lemons and his company, Gold Coast Resorts, LLC, seeking payment of $290,000 as the real estate commission.  Lemons filed a third-party complaint against Hyatt for breach of contract and specific performance.  The action was referred to the master-in-equity, the Honorable J. Stanton Cross.  Prior to trial, Hyatt settled with Lemons for $5,000 and with Naomi for $20,000. 

Judge Cross found Hyatt's testimony established that he had no intention of consummating the transaction unless he could flip the property, did not have the wherewithal to consummate the transaction, and never sought financing for the property.  He found this conduct violated the covenant of good faith and fair dealing and displayed a volitional unwillingness to meet his contractual obligations.  However, Judge Cross held volitional unwillingness was not a ground for cancellation or a defense in a breach of contract action.  Thus, he concluded Naomi had fully performed the requirements of the real estate commission agreement and earned the commission when he procured Hyatt as a purchaser who was accepted by Lemons and who entered into a valid and enforceable contract with Lemons.  He granted Naomi a judgment for $270,000, allowing for a set-off for the settlement paid by Hyatt. 

Lemons timely filed a motion to alter or amend.  Due to the illness of Judge Cross, the motion was heard by the interim master-in-equity, the Honorable Ralph P. Stroman.  Judge Stroman found Hyatt's fraudulent misrepresentation to the parties made the original purchase agreement null and void.  Thus, he concluded Hyatt was never a legitimate buyer and no duty to pay a commission resulted.  This appeal followed. 

STANDARD OF REVIEW

"An action for a broker's commission is an action at law."  Springs & Davenport, Inc. v. AAG, Inc., 385 S.C. 320, 325, 683 S.E.2d 814, 816 (Ct. App. 2009).  In a law action tried before a master, this court's review is limited to the correction of errors of law, and the findings of fact of the master will not be disturbed upon appeal unless found to be without evidence that reasonably supports the master's findings.  Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 85-86, 221 S.E.2d 773, 775 (1976).  "Where mixed questions of fact and law are presented, the legal conclusions to be drawn are not entitled to the same deference."  Springs & Davenport, Inc., 385 S.C. at 325, 683 S.E.2d at 816.

LAW/ANALYSIS

I. Interim Master's Authority

Naomi argues the interim master erred in granting Lemons' motion to alter or amend and reversing Judge Cross without reviewing the trial transcript or recalling witnesses.  Naomi never objected to Judge Stroman making his own findings of fact or conclusions of law on the motion to alter or amend, never requested Judge Stroman recall witnesses, and never questioned whether Judge Stroman had reviewed the transcript.  Accordingly, this argument is not preserved.  See Wilder Corp. v. Wilke, 330 S.C. 71, 76, 497 S.E.2d 731, 733 (1998) ("It is axiomatic that an issue cannot be raised for the first time on appeal, but must have been raised to and ruled upon by the trial judge to be preserved for appellate review."); see also State v. Oxner, 391 S.C. 132, 134, 705 S.E.2d 51, 52 (2011) ("Even though subject matter jurisdiction may be raised at any time, there is no error preservation exception allowing a party to bypass calling an erroneous ruling to the attention of the tribunal making it before appealing that ruling to a higher court.").

II.  Commission

Naomi argues the interim master erred in finding Naomi had not earned his commission.  We disagree. 

"As a general rule, a broker has earned his commission when . . . he procures a purchaser who is accepted by the owner of the property and with whom the latter, uninfluenced by any representation of fraud on the part of the broker, enters into a valid and enforceable contract."  Cass Co. v. Nannarello, 274 S.C. 326, 328, 262 S.E.2d 924, 926 (1980).  "[S]uch right to compensation will not be defeated by the failure or refusal of the purchaser to consummate the contract."  Id.  However, the broker and owner may set their own terms in the contract for the broker's services and "may make the payment of the broker's commission dependent upon the full performance of the contract of purchase or sale, or postpone the payment of the commission, or make the broker's right to the commission contingent upon the happening of future events."  Hamrick v. Cooper River Lumber Co., 223 S.C. 119, 124, 74 S.E.2d 575, 577 (1953).  "Where the obligation of the principal to pay commissions depends upon the performance of conditions precedent, the broker takes the risk of nonperformance on the part of the customer."  Id.

Each of the words "ready," "willing," and "able" expresses an idea that the others do not convey.  All three of these elements must exist in the customer, in order to entitle the broker to a commission.  It is not sufficient that the customer is ready and willing, but he or she must also have the ability to carry out the loan, sale, purchase, or exchange.  So also, the procurement of a ready, willing, and able purchaser by a broker involves not only a showing that the purchaser has the financial ability to complete the contract, but also that the purchaser is ready and willing to purchase at a price and on terms prescribed by the vendor.

The Huffines Co., LLC v. Lockhart, 365 S.C. 178, 191-92, 617 S.E.2d 125, 131-32 (Ct. App. 2005) (quoting 12 C.J.S. Brokers § 225 (2004) (footnotes omitted by court)).

Judge Stroman held Hyatt was not a buyer as contemplated by the parties' agreement and thus no commission was earned.  The first two listing agreements provided Naomi earned the commission when he procured a "ready, willing, and able" purchaser.  However, the handwritten agreement did not include such a provision. 

Where instruments entered into by the same parties at different times relate to the same subject matter, the instruments will be construed together to determine the entire agreement between the parties. If the provisions of one instrument limit, explain, or otherwise affect the provisions of the other, they will be given effect to accomplish the entire agreement between the parties.

Bishop Realty & Rentals, Inc. v. Perk, Inc., 292 S.C. 182, 184-85, 355 S.E.2d 298, 300 (Ct. App. 1987) (citations omitted).

Although the handwritten agreement did not include the "ready, willing, and able" language, we find that in construing all of the instruments together, Naomi was required to procure a "ready, willing, and able" purchaser to earn the commission.  We further find Hyatt did not meet this description.

Naomi testified he believed Hyatt had the financial means to close the transaction because according to the tax records, Hyatt owned many other properties, including ones on the waterway.  However, the record contains no evidence that Hyatt had $2,900,000 available on the date of the closing.  Hyatt testified that when he entered into the sales contract, he did not have the financial ability to close on the property.  He stated he could not close on the property without being able to flip it to another buyer and never found a buyer.  He explained he believed he would only lose his $10,000 earnest money by defaulting on the contract. 

We find Hyatt was not ready, willing, or able to purchase the property.  Thus, Naomi did not procure a ready, willing, and able buyer and did not earn a commission. 

Naomi's counsel stated at oral argument Lemons had admitted Hyatt was a ready, willing, and able buyer in his answer.  In his complaint Naomi alleged: "On or about October 28, 2006, the Plaintiff procured a buyer, Kenny Hyatt, as a party ready, willing and able to purchase the property . . . ."  Lemons admitted this allegation in his answer.  Naomi never asserted at trial Lemons was bound by the admission in the answer and the issue of whether Hyatt was a ready, willing, and able buyer was contested at trial.  We find Naomi's argument concerning the admission in Lemons' answer is not properly before this court and furthermore, the issue of whether Hyatt was in fact a ready, willing, and able buyer was tried by consent.  See Wilder Corp., 330 S.C. at 76, 497 S.E.2d at 733 ("It is axiomatic that an issue cannot be raised for the first time on appeal, but must have been raised to and ruled upon by the trial judge to be preserved for appellate review."); McCurry v. Keith, 325 S.C. 441, 447, 481 S.E.2d 166, 169 (Ct. App. 1997) ("When issues not raised in the pleadings are tried by consent, they will be treated as if they had been raised in the pleadings.").

Naomi's counsel also asserted at oral argument Lemons's counsel acknowledged at the hearing before Judge Stroman that Lemons believed Hyatt was a ready, willing, and able buyer.  In our review of the hearing, we find Lemons's counsel did not concede Hyatt was a ready, willing, and able buyer.  Instead, he was explaining Lemons's belief at the time Lemons entered into the handwritten agreement.  Lemons' counsel clearly argued at the hearing that Hyatt did not fit the definition of a ready, willing, and able buyer.  Thus, we find no merit to this argument. 

III.  Consideration of Settlement with Hyatt

Naomi argues the interim master erred in considering the partial settlement between the parties.  Hyatt settled with Lemons for $5,000 and with Naomi for $20,000.  Judge Cross's order mentioned the settlement in allowing for a set-off from his award to Naomi. 

Naomi failed to raise this issue to Judge Stroman.  Accordingly, it is not preserved.  Wilder Corp., 330 S.C. at 76, 497 S.E.2d at 733 ("It is axiomatic that an issue cannot be raised for the first time on appeal, but must have been raised to and ruled upon by the trial judge to be preserved for appellate review.").

IV.  Gold Coast as a Party

Naomi argues the interim master erred in finding that Gold Coast Resorts, LLC, had been dismissed from the case.  In listing the attorneys who represented the parties at the hearing on the motion to alter or amend, Judge Stroman noted:  "Gold Coast Resorts, LLC, had been dismissed earlier."  In his brief, Lemons acknowledges that Gold Coast Resorts, LLC, is still a party to the action.  Accordingly, the master's order is modified to reflect Gold Coast Resorts, LLC, is still a party to the action. 

CONCLUSION

We hold Judge Stroman correctly found Naomi was not entitled to the real estate commission.  However, we find Judge Stroman erred in noting Gold Coast Resorts, LLC, had been dismissed from the action.  Accordingly, the order of Judge Stroman is

AFFIRMED AS MODIFIED.

HUFF, KONDUROS, and LOCKEMY, JJ., concur.