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Professionals 100 v. Prestige Realty Inc.

filed: March 12, 1996.

PROFESSIONALS 100, AN OREGON CORPORATION, RESPONDENT,
v.
PRESTIGE REALTY, INC., A WASHINGTON CORPORATION, APPELLANT, KENNETH R. POTTENGER AND JANE DOE POTTENGER, HUSBAND AND WIFE, DEFENDANTS.



Appeal from SUPERIOR COURT YAKIMA COUNTY. Superior Court No: 91-2-02294-1. Date filed in Superior Court 6/13/94. Superior Court Judge signing: HEATHER VAN NUYS.

Philip J. Thompson, Dennis J. Sweeney & Ray E. Munson, concur

Author: Thompson

THOMPSON, J.--Prestige Realty, Inc. (Prestige) appeals a judgment awarding Professionals 100 (Pro 100) one-half of a real estate commission generated by the sale of two nursing homes, together with prejudgment interest, costs and attorney fees. The judgment was entered after the trial court determined that Pro 100 was the procuring cause of the sale and had provided a buyer as required by a written contract. Prestige contends the procuring cause of sale rule does not apply and, even if it did, Pro 100 was not a procuring cause of the sale, nor did it provide a buyer as the contract required. We affirm.

FACTS

In 1988, Carey Erwin, an employee of Pro 100, contacted an employee of West Valley Nursing Homes, Inc., to ascertain if West Valley was interested in selling any of its nursing homes. The West Valley employee indicated there was such an interest and referred Mr. Erwin to Kenneth Pottenger, broker and president of Prestige and a member of West Valley's board of directors. Mr. Erwin contacted Mr. Pottenger, and after several contacts, Mr. Pottenger sent Mr. Erwin a letter authorizing him to help market West Valley's nursing home in Bothell. The letter,

dated June 21, 1988, stated that Prestige would share with Pro 100 on a "50/50 basis the total Commissions earned at closing."

Mr. Erwin contacted John McClay of Stan Wiley Inc., who also was involved in buying and selling health-care facilities. He told Mr. McClay about the nursing home in Bothell. Mr. McClay, in turn, contacted North Pacific. In September 1988, North Pacific leased West Valley's Bothell and Enumclaw nursing homes and was granted an option to purchase both facilities for $4,500,000. Stan Wiley Inc., Pro 100 and Prestige each received one-third of the commission for their involvement in the lease/option transaction.

North Pacific subsequently contacted Mr. McClay and asked him to broker their leasehold/option interests in the Bothell and Enumclaw facilities. Mr. Erwin testified that Mr. McClay called him sometime during the first part of September 1989, and informed him of the listing. Mr. Erwin then contacted Mr. Pottenger. At trial, Mr. Erwin testified that he told Mr. Pottenger that North Pacific would not be able to sell its interest for $4,500,000 and was asked what they were worth. In response, Mr. Erwin sent Prestige a letter dated September 26, 1989, setting forth his market value analysis of the two facilities. He valued them at $2,075,000 to $2,960,000.

Franciscan Eldercare Corporation became aware of North Pacific's listing with Mr. McClay. Although interested, Franciscan Eldercare thought the $4,500,000 price was too high and did not want a lessee to operate the facilities. Franciscan Eldercare was represented by Mr. Steensland.

In September 1989, West Valley gave Prestige an exclusive listing of the Bothell and Enumclaw nursing homes. Both listings were withdrawn the following month and replaced with an exclusive listing of all West Valley nursing homes and adjacent properties, to be sold as a package. The Bothell and Enumclaw facilities were listed at $3,000,000. Mr. Pottenger, on behalf of Prestige, sent

Mr. Erwin a letter dated October 9, advising him he would "share the commissions paid on the closing of any transaction whereby you provide a buyer on a 50/50 basis." Mr. Pottenger also agreed on behalf of Prestige to "protect and respect your clientele list and . . . attempt to refer all inquiries to you."

After receipt of the letter from Prestige, Mr. Erwin contacted Mr. McClay and told him the Bothell and Enumclaw facilities were for sale for $3,000,000. Mr. McClay expressed surprise at the price, then told Mr. Erwin he was aware of a broker in Gig Harbor, Washington, who had a connection with a potential buyer "back east." Mr. McClay subsequently contacted Mr. Steensland who, in turn, contacted his client, Franciscan Eldercare. When Franciscan expressed an interest, Mr. Steensland contacted Mr. Pottenger. Mr. Pottenger passed the information about the identity of the potential purchaser on to Mr. Erwin, who then contacted Mr. Wimer, Franciscan Eldercare's representative.

After certain impediments to sale were removed and considerable negotiations took place, the Bothell and Enumclaw facilities were sold to Franciscan Eldercare in May 1991, along with the other nursing homes owned by West Valley. As a result of that sale, Prestige received a commission of $160,000. Mr. Steensland was paid at closing by the purchaser pursuant to a separate agreement. When Pro 100 did not receive one-half the commission paid to Prestige, this lawsuit was commenced.

Following a bench trial, the court awarded judgment to Pro 100 for $80,000 plus prejudgment interest, costs and attorney fees.

PROCURING CAUSE OF SALE RULE

We first determine whether, as a matter of law, the procuring cause of sale rule or the contract terms governed the ...


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