Jones Lang LaSalle Americas, Inc. v. The Hoffman Family, LLC , 606 F. App'x 706 ( 2015 )

UNPUBLISHED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Reversed and remanded by unpublished opinion.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Unpublished opinions are not binding precedent in this circuit.
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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
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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.
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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.
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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
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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.
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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).
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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)
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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.
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