-: SJC-13325, Biping Huang and others V Jing Ma and others.
-: Attorney Devine, whenever you're ready.
-: Good morning, members of the panel.
My name is Charles Devine.
I represent Biping Huang and WinPlus Realty Group,
in a matter against E/MAX Leading Edge,
Xinhang Sun, and Jing Ma.
So, just a housekeeping matter before I begin.
I noted that, looking at the docket,
that technically, I'm not the appellate.
Because they were here on a further appellate review
filed by the defendant,
but we've all treated me
as the appellant in this proceeding.
So, therefore I will go first,
but I just wanna make that known.
So, we're asking you to address the broker's remedy
for a breach of a buyer's agency agreement.
And essentially,
in summary of the points I'm going to make,
I believe that, in light of the dissent
issued in the appeals court,
I think we're called here to address that issue.
And the contract as the subject of this case
will be argued by me
to be a valid and enforceable bilateral agreement,
consistent with the laws
of the commonwealth of Massachusetts
as described by the majority decision in the appeals court,
that expectancy damages are permitted
and have not been challenged by any party,
including the dissent in the appeals court.
-: What was the consideration that your client paid
to qualify as a bilateral binding agreement?
-: So the consideration in this particular case is the,
excuse me for a second while I grab my notes.
So the agreement as set forth in Ms. Huang's affidavit
sets forth various things that the buyer's broker would do
in order to fulfill her obligations as a buyer's broker
in this transaction.
And the first thing was to use reasonable efforts
to advise and represent the defendants, Sun and Ma,
in their finding an acceptable home,
to assist them in negotiating the terms and conditions-
-: So, let's stop on that.
Let's stop on that one.
Why is that promise to do something in the future
consideration?
Charles: Well, it becomes consideration
when it is performed.
So on the day that they entered into the agreement,
each party made a promise to do something in the future.
That once it's performed, it becomes the consideration.
So in this case, just like anything,
I go to a counter and I order a sandwich for the $5.
When you order the sandwich,
the sandwich hasn't been made yet.
But upon making the sandwich,
that consideration is delivered and the monies due.
In this particular case-
-: But did you have any cases where
the promise to use reasonable efforts by your broker
is sufficient to constitute consideration
to make it a bilateral agreement?
-: Well, there is a case that was cited in the brief.
And if I may, I believe it's the Sam Nichols case.
It was the-
-: That's the rescript opinion, right?
-: It may have been a rescript opinion, Your Honor.
But basically it applied the principles
that had been set forth previously in the law
concerning the difference between
a unilateral promise and a bilateral agreement.
-: Right, and so what I did is
I looked at those cases that Sam Nichols relies on,
and in each one of those cases,
consideration was paid at the time of contracting.
It was either a thousand dollars, or at least a dollar.
Something went from one party to the other
at the time of the execution of the agreement.
So that's why I asked my first question.
What did the broker do at the time of the agreement
to make this a bilateral agreement?
-: Well, so the broker immediately began
bringing the buyers around to properties,
showing them the properties, arranging for showings,
arranging for inspections, submitting offers.
-: And isn't that what happened in Tristram's Landing?
-: But Tristram's Landing was a unilateral promise case.
So Tristram's Landing case is sort of like-
-: Right, so yeah, I'm just trying to figure out
what the difference is
between your situation and Tristram's Landing.
-: I believe that Tristram's Landing case involved
a seller's (inhales deeply).
Can I take a half step back, judge,
and just- -: Absolutely.
-: Talk a little bit about what the appeals court,
the fact that when the appeals court was describing
the requirements of
a bilateral exclusive brokerage agreement,
it was painting the seller's broker
and a buyer's broker with the same brush.
And I'm not saying that they shouldn't have done that,
and I think that it probably was appropriate,
but basically what they essentially said
was that there are certain requirements
for a bilateral agreement in both contexts,
that they recite additional consideration,
that the broker must agree to take some act
in addition to merely selling the property,
such as advertising, taking diligence efforts,
and that's the Nichol's case.
-: (chuckle) I read some of these old cases,
but they're really, (chuckle)
I mean, isn't this clear this is a contract here,
as the majority says?
And I don't even know if the dissent disagrees
with it being a contract.
They were gonna be the exclusive dealer
and they had a bunch of obligations to do:
Find them people,
once they started finding them
and taking them around and showing them all these places,
isn't that the consideration?
-: Yes, that's what I've argued in the brief,
and that's what I have been trying inarticulately
to convey up to this point in my argument.
-: Do you read the dissent as saying there is,
I mean the sent points to Tristram
and some of the others,
but I don't think it questions there's a contract here.
It just questions whether it's-
-: As I felt it through the dissent,
and I've read it dozens of times,
I sort of can narrow down the defense position
to be as follows.
And I'm happy if anybody disagrees with me
so we can discuss it further.
That a clear statement element is missing from the contract.
And that although the contract might be bilateral,
although the expectancy damages may be recoverable,
that Judge Englander says,
if there's not a clear statement of the fact
that the broker would be entitled to a commission,
even if he's not the procuring cause,
the absence of that prevents the broker from enforcing,
or should prevent the broker from enforcing the contract.
-: Well, from obtaining the commission.
-: Yes, well, but the contract requires a payment of a fee
that would be the commission, if it's available.
Or if it's not available, the similar amount from the buyer.
So really, the fee is the fee that's payable
from one or two sources. -: I think that
the dissent's objection or position, I think,
is accurately stated as
unless you tell the common layperson
that they're on the hook to pay 2% of the sales price,
regardless of whether they're involved in the sale,
you can't collect the commission.
That there needs to be a clear statement,
whether orally or in writing,
that you're on the hook as the buyer
to pay the full amount of the commission.
And absent that clear standing,
under the appeals court case and curiae,
as between the buyer and the broker,
we might as well put the onus on the broker to be clear.
-: The clarity that's required
by the curiae case and the other cases,
the Bump case and the Latuka case,
the clarity described in those cases,
the un-ambiguity that is described in those cases,
is the fact of the exclusivity of the relationship.
Not of the fact of specifically, buyer,
you're gonna have to pay broker a commission
even if you don't procure the deal.
I don't think that that's what's required-
-: Well, curiae says- -: In those cases.
-: A statement with enough specificity
to alert the seller to the situation
in which he can be liable for a broker's commission,
even if a sale is not consummated by the broker.
Charles: Yes, and I agree.
My argument is that this agreement,
as set forth in Huang affidavit,
she says exactly that.
She says that,
and at the end, you owe me a commission,
you owe me a fee that's equal to 2% of the commission
from the seller.
And if you can't get it, you have to pay it to me.
So, as far as the summary judgment aspect of this case goes-
-: And if the sale is not consummated by this broker.
-: Yes, and I think that
that's what the Huang agreement says.
Kafker: Is your argument that basically
the use of the term exclusive encompasses that notice?
-: No, I think in some of these cases, they suggest that.
But in the Huang case,
we have many terms to that agreement,
including the specific instruction
that the commission would be doing-
Gaziano: These were oral agreements though, right?
That's the problem?
-: The problem is that they're oral agreements,
absolutely, judge.
That's why we're here.
(Gaziano laughs) It's an oral agreement.
So, I would like to talk about
the amicus brief for a second.
'Cause the amicus brief pretty much describes,
from the broker's standpoint, what's going on here.
And they talk about the fact that
these sort of agreements are not uncommon,
that they've become more common
over the last 30 years or so.
The amicus brief says that they've been recently developed
and recognized in the marketplace.
That they typically involve professional services
provided by the broker to the buyer,
in which they enter a separate agreement, and the-
Kafker: Yeah, it's kind of interesting, 'cause,
are all the cases
that the majority and the Sun are fighting,
are they all seller broker cases or?
-: They are. -: So I mean,
the amicus says, look, a buyer brokers,
particularly in a world
where everyone can go on the internet
and go off and do things on their own,
basically you're not paying for them to catch a fish;
They're basically teaching you how to fish, right?
Charles: I wish I said that.
-: They're taking you around,
they're teaching you what the market is,
they're showing you what these different units,
so you understand what's a $600,000 house
and what's a $900,000 house.
And then if you can just go off
and do this on your own at the last minute,
no one's gonna do these buyer agreements.
There seem to be some,
particularly in an internet world,
where anyone can sort of go off on their own at some point.
Charles: And that's sort of a point
that I tried to make in the brief,
in that the broker educated the defendants
in all these processes and procedures,
and all the knowledge it takes in order to analyze a deal,
submit offers and respond, and get inspections,
and do market analyses, and all that stuff.
-: So is there a difference then in your...
Should we treat sellers the same as buyers?
The majority and the dissent say, well,
there's no argument to treat them differently,
but the amici seems to suggest
that there should be a difference in treatment.
-: Oh, I read the amicus briefs the opposite.
I think that amicus,
they're talking about the exact same thing.
They're talking about a bilateral agreement
that sets forth exactly
what the broker is offering to the party,
the seller or the buyer,
and the fees specifically set out in the agreement.
And that agreement is not a commission agreement
for the sale of a property.
That is a agreement for the rendering
of professional brokerage services for a fee.
-: But it's much more defined in the seller agreement.
The relationship is much more constrained
than it is in the buyer's.
-: The relationship is more constrained in the buyer's side?
-: Right. -: It may be, yeah.
I think that it is more defined
as to what the buyer's getting for their money.
And I think that's what the party's intended to do here.
Spell out a list of things
that the buyer would get from the broker along the line.
And then the affidavit
establishes that the broker delivered.
Not only did everything she said,
but actually lent money to the defendants
as a bridge loan for one of the transactions that was-
Gaziano: There was an offer to lend money.
-: I'm sorry?
Gaziano: An offer to lend money, right?
-: I'm sorry, I didn't get that.
-: I thought there was an offer to lend money for-
-: I think they actually delivered the check
to the defendants. -: But then the-
-: But then the deal wasn't consummated,
they bought the subject property instead,
while those communications were pending.
-: Can you tell me if I'm wrong
with this sense of how this works?
People who are are out looking to buy a house,
and the person selling the house,
they know the broker's going to get a percentage.
The average person who's talked to a buyer's broker
might very well think,
wow, this is great that they're helping
and if they actually help me find a house,
they're gonna make some money.
But if three weeks after the last time we talked,
I'm talking to somebody at a dinner party
and they tell me about a house available
that's not even on the market, and I go buy it,
they don't expect
that they're going to have to pay a broker's fee.
Now, maybe they should have to,
but considering if that assumption's correct,
isn't it better to have that in writing
so that everybody knows what's going on?
-: Well, fortunately or unfortunately,
the statute does not require it to be in writing.
In this case, so is it better to have it in writing?
I mean, if I was setting the rules, maybe.
I would think- -: The way this world
works right now.
-: In this limited definition of the world,
as to whether it would be a good thing, yes,
I would agree that that would probably be a good thing.
But we're sorta dealing with a situation here
where the oral agreements are permitted.
The affidavit states that the parties had agreed.
Wendlandt: But as between oral and writing,
so it would be better to do writing, right?
-: Sure. -: But this is this world,
so we do oral.
So as between a clear statement that you're owed commission,
regardless of whether or not you're involved,
and not having that clear statement,
why wouldn't we create a world
where you did have to have the clear statement,
whether orally or in writing, right?
It's not that they can't collect
for all the things that they've done,
it's just that they should be clear.
-: Can I answer the questions-?
-: Absolutely, sorry. -: In order
from the Justice Lowy first,
is that the affidavit says that the parties agreed
that Huang would be the defendant's exclusive buyer's agent,
and the defendants would refer
all potentially acceptable real property to the plaintiffs
and notify other real estate agents
of the party's exclusive agency.
So that's part of the record.
So in this particular case,
it was a term that was discussed, negotiated,
and agreed to between the parties.
So this case is all about
just binding the parties to their agreement.
On the clear statement rule,
the dissent states that some of the earlier cases,
the curiae cases, the Bump cases,
expressed some sort of policy,
some sort of indication that the policy
was gonna move into that direction.
I would disagree with the dissent,
because I think that those cases
are merely black letter contract law,
that a unilateral promise is not performed
until the delivery of the consideration.
I think that those cases stand only for that
and nothing more.
-: Isn't the problem with the clear statement,
I mean, if these had to be in writing,
the clear statement obviously would be hugely advantageous
and simplify everything.
And then all the brokers would know to include it.
The problem we've (chuckle) got is
now we've got an oral world,
which we're gonna end up litigating this thing
in every single case, right? -: Right.
-: It's gonna be basically a litigation creation device.
-: So, I think that the way that the law exists,
that exclusivity has to be specifically
and unambiguously stated,
that the terms of the contract,
what the broker's going to do, has to be stated,
that the dissent argues that the clear statement rule,
well first of all, clear statement rule
is not only not required today in Massachusetts,
it's not required in any state.
And I'm saying that with 98% certainty,
because we did our best to look at every state.
So, the dissent seems to argue.
Wendlandt: You looked at of 49 states. (chuckle)
-: What's that? -: You looked at 49 states?
-: We did. (laugh)
So, the dissent seems to argue that
it would be good consumer protection for this rule to exist.
There was a portion of the dissent in which it said that
the sophistication of the parties, or the lack thereof,
is good grounds to consider a clear statement element.
Well, my response to that is that might be so.
And if it is so, that would be the job of the legislature,
not of the courts,
to impose that requirement on this industry.
Especially in light of the amicus argument
about how the market is using these agreements now,
and how these agreements exist in written form
that you can pull off of the website
from the Massachusetts Association of Realtors.
And that these agreements are fairly comprehensive.
And it would be very, very difficult
on the terms set forth in the Huang affidavit,
or in looking at the terms
in the Mass Association of Realtors contracts,
to interpret this agreement
as anything other than what it's represented to be,
an agreement for a fee,
for providing professional services to a buyer,
who, up until these agreements existed,
really had no representation in the marketplace,
'cause everybody were presented
and was paid by the seller.
So, I notice that my time has been up for quite some time.
If there's no further questions.
-: Thank you. -: Thank you.
-: Okay, Attorney Leone. -: Justice.
Good morning, Attorney John Leone of Arlington,
I'm here representing the appellees Xinhang Sun and Jing Ma.
They are asking you
to void so much of the appellate decision
that struck the summary judgment,
and allow the summary judgment or lower court to stand.
-: Can I ask you a question? -: Yes.
-: Why isn't this the legislature's problem to fix?
-: The legislature has spoken for
specific exemption of real estate broker contracts
as an exception to the statute of fraud.
-: No, I'm talking about the problem of the clear statement.
Why should the courts be involved
in requiring a clear statement,
whether in writing or orally?
Why not just let the legislature fix it?
They have a lot of statutes regulating brokerage agreements.
-: They do, Your Honor.
But this court has, in the line of cases
from Tess Rivers, to Tristram's Landings, curiae Bump,
been imposing more and more requirements
on what a broker will have to do in order to get their fee.
They have to have some sort of an agreement,
they have to be one of the clear.
And factors to make an actual transaction happen,
they have to be one of the moving parties
in that transaction in order to get it.
What we are saying is-
-: Your argument isn't that there wasn't a contract, right?
-: No, we're not arguing there wasn't a contract.
-: So given that there was a contract
and the broker performed,
why can't they expect damages up to and including
the full amount of their owed commission?
-: Well, we're arguing that she didn't perform,
that she didn't perform in this sale.
She wasn't the clear and efficient cause of the sale,
she didn't have anything to do with the sale.
-: Well that's because your client breached the exclusivity.
-: Well there is past case law
that allows the clients to void exclusive contracts
by buying another home with another broker
or buying a home by themselves without the broker.
If there is a clear statement rule,
which we are arguing there should be, for public policy
and for the help of unsophisticated buyers,
it would've been clear to my clients
and to all other buyers right up front
that no matter what they do,
they have to pay this broker a fee.
Whether or not this broker is entitled to the fee,
'cause she, or didn't- -: I guess that's why
I asked you the first question,
which is, you know,
you're not arguing that there wasn't a contract.
And in contract, you get all sorts of damages,
including expectation damages.
So if there's a contract, and there's a breach,
why is the broker not entitled to as damages?
She expected, which was the commission.
-: Well, we're arguing that
there wasn't a breach of that portion of the contract
where she was a clear and efficient motivator
in the actual sale.
She had nothing to do with the sale.
-: I mean, she's off on her own on the internet.
That's perfectly appropriate.
But once she says
you're gonna be the exclusive representative,
shouldn't she have referred this,
hey, there's this out there, go call RE/MAX.
By the way, does RE/MAX get both sides of the?
It sounds the client has benefited.
-: Yeah, I believe RE/MAX did get the full 5%.
-: They get the full amount. (chuckle)
So RE/MAX is the one who's manipulating this process.
If she says, look, I have an exclusive representative,
it's this person.
Is RE/MAX allowed to say
we're not dealing with you 'cause we want both sides?
John: I believe that's what they did in this case.
-: Can they do that, legally?
-: My understanding, Your Honor, if it's not-
Kafker: Not an exclusive relationship. (chuckle)
John: If it's not on MLS and not on the market yet.
-: Yeah, see that's where this gets really cute.
But it isn't that why the amicus
has a point here that buyers,
it's hard to buy a house now in Massachusetts.
It takes a lotta work for someone to do all this legwork.
-: Well I actually, Your Honor,
I read into the amicus brief that they,
and we're not disagreeing that a buyer can have a contract,
but they should have taken the extra step
and detailed what those expectation damages would be
and what they would-
-: The problem I have is the oral world.
I like the clear statement of,
I mean, again, I think Justice Wendlandt may be right,
it's the legislature's job, not ours.
But it would simplify things
if you had a written contract that said this.
It would make everything clear,
it would handle Justice Lowy's problem
of the innocent buyer.
But the problem is, in an oral world, (chuckle)
this thing is gonna be impossible to enforce.
It's gonna be a basically he said, she said
every single time.
-: That's the problem with an oral world, Your Honor.
I'm not disagreeing with you.
-: But there's no disagreement
about the stipulation and the exclusivity clause, right?
There's no? Right?
-: Well, the word exclusivity,
I think the problem I have with it is,
unsophisticated buyers,
many of whom, such as my clients,
who are not native English speakers,
maybe they don't understand what exclusive means.
-: Maybe they better find out! -: And they're dealing with
a million dollar home.
-: Maybe they better find out.
'Cause they're entering into a contract.
-: If they aren't given a written contract up front,
how do they even know to ask?
How do they even know
they should get- -: Well, I mean,
I think that argument has sailed, right?
The statute of frauds does not apply.
Are you even arguing that anymore?
-: I'm sorry, Your Honor?
-: The statute of frauds does not apply, right?
You don't have to have a writing.
-: No, you don't have to have a writing.
I'm not saying you do.
I mean, it's straightforward.
-: But they weren't far down the road with the plaintiff.
There were 10 homes shown, four offers made,
and a personal loan.
-: Well, they didn't actually take the loan, Your Honor,
so I'm gonna agree with your earlier.
-: Okay, but there was an offer
for a personal loan. -: They offered a loan.
-: Right, so it's not like they-
-: But by that same argument,
if I go into one car dealership
and test drive a car 18 times,
and then I buy a car from another dealership,
I don't expect to pay that first dealership
a commission on the car that I bought.
-: Yeah, what if you hire a car broker for you? (chuckle)
John: Well, (chuckle) I'm sure he or she
would most likely have it in writing.
I've never hired a car broker, so I don't know.
-: No, it's a little bit different, but yeah.
-: Right, but it's the same concept.
-: So are you saying that there is no breach of contract?
Or are you saying there's a breach, but?
-: I'm saying that they were allowed to breach the contract,
which they did. -: They were allowed-
-: Without any expectation damages,
because those damages that plaintiff Pilant is arguing for
warrants clearly and specified set out
in order for a home buyer such as my clients
to fully understand and appreciate
that they would owe her a commission
whether or not she had anything to do with the sale.
-: But what do you say the damages should be for the breach?
-: Amazon gift card? -: Yeah. (chuckle)
I'm sorry, Your Honor, I don't wanna be glib, but-
-: (laugh) But that means nothing.
-: My client did state that,
but if there was no damages set out
and an expectation- -: Then don't we have to
figure out what the damages should be?
Or you get to decide?
-: You're saying they're nominal damages.
-: Nominal.
What does the contract provide for them?
What is exclusive about it
if you'll do all this work for me,
and if it works out, great, but.
Could they have another broker working too?
Could they have three different brokers as well?
Would that violate
the exclusivity provision of the contract?
It certainly sounds like it.
-: It says it violated.
You admit that it's violated, don't you?
-: I'm sorry?
-: You're admitting that
the exclusivity part of the agreement was violated.
-: In our opinion,
they are able to breach that portion of the agreement.
They can void the agreement
by buying a home through another broker,
and I think. -: So that's
what Justice Kafker's asking.
So they could have had a team of buyers brokers out there
saying all of these are exclusive-
-: Unbeknownst to each other. -: Right, exactly, clearly.
And then the one that they like,
the one that who ended up finding the house gets the money,
and everybody else is out.
-: That's simplified the argument,
but we think- -: That can't be right.
-: The legal case law leading up to that
in the various cases we cited in the dissent
in our request for further appellate review
validate that course of action by my clients.
That's why we're asking this court
to move and to make a decision
upon what is actually a buyer's broker.
What is enforceable, what is not enforceable.
That could be the question, as Judge Wendlandt,
I'm sorry, I can't pronounce your name properly.
-: That's perfect. (chuckle) -: Wendlandt says.
Why not the legislature and why you?
This court has the ability to make a reasoned decision
based upon the case log before you,
that you've already ruled over the past 50 years or so,
I think going back to the first Tess Rivers,
and move and make a rule
that's gonna make it clear to everybody,
sophisticated brokers, unsophisticated buyers,
that can also not bother the arguments in the amicus brief
that we can't void buyer brokers.
We're not asking them to void buyer broker contracts.
We're only asking that they, as the sophisticated party,
the Mass Association of Realtors,
has the ability to specify a contract,
which they have online on their forms,
what these damages could be.
It's not a- -: I'm sorry,
the online form says what the damages are?
-: No, they don't.
They could change their online form,
which all their brokers can download and hand to a client,
and include that language where it's clear and unambiguous.
-: They don't think that's what you're paying for.
They think you're paying to become the fishermen.
-: Then they should charge by the hour, Your Honor.
-: Well, but see the problem, yeah, maybe.
But then your clients don't wanna pay by the hour,
'cause most of them don't have the money for it.
They wanna pay out of the proceeds they have
when they get a mortgage.
-: We have to find a public policy rationale
that's gonna satisfy everyone.
-: That would be great if that existed in the world.
-: Yeah, that's always un-scrambling the egg.
But we have to get as close as we can there.
-: Why isn't the right public policy legal doctrine,
if we're gonna create one and not let the legislature do it,
get contract damages?
Contract damages include maybe quantum meruits,
maybe what the equivalent hourly rate is,
maybe expectation damages.
And I don't know of any case,
outside of the brokerage contract that you're arguing for,
and the dissent seems to argue for,
where you have to specify in the contract
what those damages are.
You prove it up at trial.
-: I think that's the underlying problem
with broker agreements in general.
-: Yeah, why are they different?
Why should we treat them differently?
John: I'm not gonna be glib,
but why do they get 5% of a $2 million home?
Wendlandt: Because they agreed to.
-: It's the world that we currently live in,
and this is where we're at.
It's a set of rules that the brokers, and the legislators,
and the court have worked on for years,
and they're just not totally clear yet.
And we're just asking for that specificity and clarity.
-: You don't care which way we go, just be clear?
-: Oh no. (all laugh)
Clarity and specificity is in my client's favor, obviously.
-: Your opposing counsel said
no other state has imposed this clear statement rule.
Have you found any states that have a clear statement rule?
-: No, and the cases that my brother relied on
from other states, I don't think were on point either.
-: I mean, when our law clerks, those hardworking people,
when they go out looking for cases like this,
where there's an exclusivity provision
without a specific damage provision,
we're not gonna find anything in the country on this?
'Cause it seems like this would be litigated.
'Cause he's got some sites,
and I've read some of the things,
and the appeals court fights over these old cases,
but they all say they're not on point.
Aren't we gonna find out-of-state cases on point
going against you?
-: I'm not sure you're gonna find out-of-state cases
for or against.
Kafker: Okay, that's fair.
-: Any other questions?
-: All set? -: Anything else?
Thank you very much, Your Honors.