Trammel Crow Co. No. 60 v. Harkinson

In Trammel Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631 (Tex. 1997), the plaintiff, a real estate broker, brought an action for tortious interference of a written contract, which provided him the exclusive right to sell a property. Id. at 632. Underlying the written exclusivity contract was an oral agreement stating the terms of his commission. Id. Although the plaintiff argued that his claims were "not for the recovery of a commission, but for tort damages," his requested amount of damages was equal to the commission he would have received under the oral commission agreement. Id. at 633-34. He alleged that the defendants had tortiously interfered with his ability to act as the exclusive representative; however, this agreement included no terms for the amount of commission, so any damages would still hinge on the unenforceable oral commission agreement. Id. at 634. The court ruled that such a result was directly contrary to the statutory mandate that "an action may not be brought in a court in this state for the recovery of a commission for the sale or purchase of real estate unless the promise . . . is in writing and signed by the party to be charged." Id. (citing Tex. Rev. Civ. Stat. Ann. art. 6573a, 20(b) (Vernon Supp. 1997)). Thus, because the plaintiff, through the tortious interference claim, was ultimately seeking "recovery of a commission for the sale or purchase of real estate," the statute of frauds barred recovery despite the fact that it was not brought as a breach-of-contract claim. Id. The Texas Supreme Court held that this section of the Real Estate License Act precluded a real estate broker's action for tortious interference to recover a commission. In that case, Hunt Products, a prospective tenant, hired Patterson/McLaine Group, Inc. to locate rental space. Id. at 632. In turn, Patterson/McLaine authorized William Harkinson, a real estate broker, to act as its exclusive representative in locating the space. Id. Under his agreement with Patterson/McLaine, Mr. Harkinson was supposed to obtain his commission from the owner of the rental space. Trammel Crow, 944 S.W.2d at 632. Mr. Harkinson negotiated a lease under which Hunt Products would lease property owned by Trammel Crow. Id. Trammel Crow sent Mr. Harkinson an unsigned commission agreement. Id. Mr. Harkinson redrafted the agreement, signed it, and returned it to Trammel Crow. Id. A Trammel Crow employee told Mr. Harkinson that a supervisor would sign the agreement, but no one signed it. Id. Meanwhile, without Mr. Harkinson's knowledge, Patterson/McLaine entered into an agreement with Trammel Crow, whereby Patterson/McLaine would pay Mr. Harkinson a vastly reduced commission, and Trammel Crow would pay him nothing. Id. at 632-33. Harkinson sued Trammel Crow and Patterson/McLaine for tortious interference with his oral commission agreement, tortious interference with his exclusive-representation agreement, and civil conspiracy. Id. at 633. The Texas Supreme Court noted that Mr. Harkinson did not have a signed commission agreement as required by the Real Estate License Act. Id. The Court held that this barred his action for tortious interference with the oral commission agreement. Id. at 635. he Court noted that "Harkinson's claims, though couched in terms of a tort, are for the recovery of a real estate commission." Id. at 633. Significantly, the Court barred Mr. Harkinson's tortious-interference claim against Patterson/McLaine, a third party that never entered into any commission agreement with Mr. Harkinson. Id. at 634. The Court also examined Mr. Harkinson's use of promissory estoppel to attempt to recover the commission and stated, "As a licensed real estate broker, Harkinson cannot act or forbear from acting in reliance on anything less than a signed written commission agreement. When a broker does so and relies on a promise to sign a written agreement that would satisfy section 1101.806(c), the broker inevitably does so at his or her own peril." Trammel Crow, 944 S.W.2d at 636-37. The Supreme Court applied the same reasoning to Mr. Harkinson's claim of tortious interference with his exclusive-representation agreement, and held that this claim was barred as well. The Court noted: "As we read Harkinson's claim, he asserts that had Trammel Crow not interfered with his exclusive representation agreement, he would have been paid his commission as the exclusive representative negotiating a lease for Hunt Products . . . . The loss of the opportunity to negotiate exclusively on behalf of Hunt Products in this instance translates only into the loss of the expectancy of receiving a commission at the end of the lease negotiations." Id. at 634. In other words, because Mr. Harkinson could not prove up damages apart from the lost commission, he was barred from any cause of action that sought the commission as damages. Even if Mr. Harkinson had proven a breach of his exclusive-representation agreement, his claim would still have been barred as "illusory and wholly derivative of his unenforceable oral commission agreement." Id.