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Dalton v. Sandifer

Court of Appeals of Tennessee, Knoxville

February 27, 2017


          Session November 22, 2016

         Appeal from the Chancery Court for Sevier County No. 14-10-333 Telford E. Forgety, Jr., Chancellor

         This case involves a dispute over the commission earned from a real estate transaction. The parties disagree as to whether the plaintiff, Clay Harris Dalton, is entitled to a part of the commission on the transaction. Jerry Sandifer is a principal real estate broker licensed in Tennessee. He is the sole proprietor of Tennessee Realty Pros, LLC (TRP), a Tennessee limited liability company. Dalton is an affiliate real estate broker licensed in Tennessee. On September 6, 2013, Dalton registered his real estate license with Sandifer and TRP (collectively the Brokerage). On November 1, 2013, TRP secured a commercial exclusive right to sell listing agreement from a seller. The agreement encompasses the real estate sold in the transaction at issue. Eventually, TRP procured a buyer, and on March 23, 2014, the buyer executed a commercial purchase and sales agreement. That agreement listed Dalton as the Buyer's Designated Agent and selling licensee. It listed Sandifer as the Seller's Designated Agent and listing licensee. On September 30, 2014, the real estate closing took place, resulting in a total broker's commission of $97, 400. Because only one brokerage was involved in the transaction, the entire commission was paid to TRP. Dalton claims that he is entitled to a share of the commission. He further asserts that he had an agreement with Sandifer that Dalton would be paid a share of the commission on the buyer's side of the transaction. Because the Brokerage refused to disburse any of the commission to Dalton, he filed a complaint seeking his share of the commission. The trial court found that, based on the customary and contractual commission split at TRP, Dalton is entitled to $34, 090 for acting as the buyer's agent. The court also found that Dalton was entitled to $2, 000 for his efforts in listing real property for the Brokerage. Accordingly, the trial court awarded Dalton a total judgment of $36, 090. The Brokerage appeals. We affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed; Case Remanded

          Nicholas Black, Maryville, Tennessee, for the appellants, Jerry Sandifer and Tennessee Realty Pros, LLC.

          Scott D. Hall, Sevierville, Tennessee, for the appellee, Clay Harris Dalton.

          Charles D. Susano, Jr., J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and JOHN W. McCLARTY, J., joined.




         Jerry Sandifer is the founder and sole owner of TRP, which is involved in the sale and purchase of real estate. Sandifer has served as the principal broker for the company since he founded it. Clay Dalton is an affiliate broker licensed in Tennessee. Dalton registered his license as an affiliate broker with the Brokerage in September 2013.

         At TRP, the customary practice is that an affiliate broker who closes a transaction splits the commission earned with TRP. Dalton and Eric McPeake, another affiliate broker at TRP, testified regarding the customary commission split at TRP. Both testified that when an affiliate broker makes a sale, the customary practice is that the affiliate broker earns seventy percent of the commission and TRP receives thirty percent of the commission. Sandifer did not dispute that this is the customary commission split at TRP.

         On November 1, 2013, in the transaction at issue, TRP secured a listing agreement from the seller. This agreement gave TRP the right to sell a thirty-three acre tract of land. The transaction that is the subject of this case involves a 2.5 acre parcel of the larger tract. The listing agreement indicates that the "Firm shall practice Designated Agen[cy] ... in this transaction." The agreement did not establish a dual agency relationship in which the licensee would serve as the agent for more than one party in the transaction. Under the terms of the agreement, dual agency "status may only be employed upon full disclosure to each party and with each party's informed consent." The listing agreement designates Sandifer as the designated agent for the seller.

         In addition to the listing agreement, Sandifer and the seller executed a confirmation of agency status form. That form indicated that Sandifer was serving as "Designated Agent for the Seller" rather than a dual agent requiring the consent of both the seller and the buyer.

         In February 2014, TRP obtained a commercial letter of intent to purchase the property from the buyer. This letter indicates that Sandifer represents the seller in the transaction. The letter, however, does not indicate a representative for the buyer and is not signed by the buyer.

         The following month, the buyer executed a commercial purchase and sales agreement for the property with a purchase price of $1, 790, 000. This agreement defines the agency relationship among the parties. The agreement indicates that the broker representing the seller, the listing company, is TRP. The designated agent for the seller and independent licensee for the listing company is Jerry Sandifer. In addition, the broker representing the buyer, the selling company, is TRP. The designated agent for the buyer and independent licensee for the selling company is Clay Dalton. Thus, TRP is the broker for both the listing company and the selling company, but a different independent licensee is assigned to each party.

         Because the same broker represents both the buyer and seller, paragraph 12(A)(5) of the purchase and sales agreement applies to the transaction. That provision contains the following language:

If Buyer and Seller are both being represented by the same Broker, a relationship of either [ ] designated agency, OR, [ ] Facilitator OR [ ] dual agency shall exist.

(Bracketing in original; emphasis added.) On the executed document, however, none of the boxes are selected to indicate the relationship that exists.

         Subsection (a) of this paragraph reads as follows:

Designated Agency Assignment. [Applicable only if designated agency has been selected above]
The Broker has assigned affiliate Licensee Clay Dalton to work exclusively with the Buyer as Buyer's Designated Agent and affiliate licensee Jerry Sandifer to work exclusively with Seller as Seller's Designated Agent. Each Designated Agent shall ... not represent in ...

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