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Unpublished Opinion No. 2011-UP-266   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.