Present: All the Justices
GSHH-RICHMOND, INC.
v. Record No. 960493 OPINION BY JUSTICE BARBARA MILANO KEENAN
January 10, 1997
IMPERIAL ASSOCIATES
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Theodore J. Markow, Judge
In this appeal, we consider whether a lease provided
adequate consideration for the lessor's promise to pay a sales
commission to the leasing agent if the lessee later purchased the
property.
GSHH-Richmond, Inc. is the successor in interest to Virginia
Realty and Development Company (collectively, Virginia Realty), a
party to the disputed contracts in this case. Virginia Realty
sells and leases commercial real estate on behalf of its clients.
Imperial Associates is a general partnership which owned the
Imperial Building in the City of Richmond. In September 1993,
Virginia Realty entered into a "Sales and Leasing Agreement" (the
listing agreement), in which the "Owner" employed the "Agent,"
Virginia Realty, to procure a lease for the Imperial Building.
The Owner agreed to pay Virginia Realty a six percent commission
"on all leases originated by the Agent," and reserved the option
to pay the balance of any lease commission due the Agent in the
event of a sale.
In December 1993, Imperial Associates and Kaestner and
Associates, a sole proprietorship, entered into a lease
negotiated by Virginia Realty. The lease provided Virginia
Realty a commission of six percent of the rental income received
by Imperial Associates. The lease also specified that Virginia
Realty would receive a sales commission of six percent of the
purchase price, in addition to the rental commission, if Kaestner
and Associates, its successors, or assigns purchased the
building. The lease stipulated that the sales commission was
provided "in consideration of Agent's consummating this lease."
Virginia Realty received its rental commissions pursuant to
the lease from March through December 1994. During the summer of
1994, Imperial Associates advised Virginia Realty that it was
interested in selling the Imperial Building to Kaestner and
Associates.
In October 1994, Imperial Associates entered into a purchase
agreement with Four Twenty Two Corporation, a corporation whose
sole shareholder, officer, and director is Joseph W. Kaestner.
In January 1995, Imperial Associates sold all its rights in the
Imperial Building to Four Twenty Two Corporation for $1,550,000.
Virginia Realty was not paid a sales commission on this
transaction.
Virginia Realty filed a motion for judgment against Imperial
Associates alleging that, under the lease, Imperial Associates
owed Virginia Realty a $93,000 commission for the sale of the
Imperial Building. Imperial Associates filed a motion for
summary judgment on this issue, arguing that there was no
additional consideration in the lease for the sales commission.
Imperial Associates contended that Virginia Realty's services in
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consummating the lease were no different from the
responsibilities Virginia Realty had undertaken in the listing
agreement.
The trial court granted summary judgment to Imperial
Associates on this issue. The court concluded that Virginia
Realty had provided no additional consideration for Imperial
Associates' agreement to pay the sales commission.
On appeal, Virginia Realty argues that, in return for the
sales commission, it rendered services in "consummating the
lease" which included negotiation of the lease and advice
provided during that process. Virginia Realty asserts that these
services were distinct from, and in addition to, the services it
was required to provide in "originating the lease."
In response, Imperial Associates contends that the listing
agreement provided the entire compensation due Virginia Realty
for the lease and sale of the property. Imperial Associates
argues that Virginia Realty assumed only one obligation under
both contracts, and that Imperial Associates' conditional promise
of additional payment in the lease is not binding because
Virginia Realty had a pre-existing duty to perform the same
obligation under the listing agreement. We disagree with
Imperial Associates.
We evaluate the consideration given for a contractual
obligation in accordance with a well-established standard:
Consideration is, in effect, the price bargained for
and paid for a promise. It may be in the form of a
benefit to the party promising or a detriment to the
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party to whom the promise is made. It matters not to
what extent the promisor is benefitted or how little
the promisee may give for the promise. A very slight
advantage to the one party or a trifling inconvenience
to the other is generally held sufficient to support
the promise.
Sager v. Basham, 241 Va. 227, 229-30, 401 S.E.2d 676, 677 (1991)
(quoting Brewer v. Bank of Danville, 202 Va. 807, 815, 120 S.E.2d
273, 279 (1961)); see also R.K. Chevrolet, Inc. v. Hayden, 253
Va. ___, ___, ___ S.E.2d ___, ___ (1997), decided today.
In reviewing the contracts before us, we also note that the
words "originate" and "consummate" have different meanings. The
plain, ordinary meaning of the word "originate" is "to cause the
beginning of: give rise to: initiate." Webster's Third New
International Dictionary 1592 (1993). In contrast, the plain,
ordinary meaning of the word "consummate" is "to bring to
completion." Id. at 490.
Applying these definitions, we conclude that the listing
agreement required Virginia Realty to originate a lease by
presenting to the owner a person or entity which eventually
executed a lease for the premises. The listing agreement did not
require Virginia Realty to complete the negotiation and execution
of that lease to receive a rental commission.
Unlike the listing agreement, however, the lease contained a
provision for the payment of a sales commission, and recited
different, additional consideration for that commission. The
sales commission was payable in consideration of Virginia
Realty's consummation of a lease that resulted in a sale of the
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property. In order to consummate a lease, Virginia Realty was
required to bring the transaction to completion. The lease
specifically stated that a sales commission "shall be in addition
to the rental commissions provided for in the immediately
preceding paragraph."
This Court considered a similar factual situation in W.D.
Nelson & Co. v. Taylor Heights Development Corp., 207 Va. 386,
150 S.E.2d 142 (1966). There, the lease provided that if the
tenants purchased the premises during the lease term, the agent
would receive a sales commission based on the gross amount of the
purchase price "in consideration of Rental Agent's consummating
this lease." Id. at 388, 150 S.E.2d at 144. The trial court
held that this provision was unenforceable for lack of
"sufficient consideration." Id. at 388, 150 S.E.2d at 145.
This Court held that "[a]lthough [the] promise to pay
additional compensation was of a contingent nature it was based
on adequate consideration. Any other construction would be
contrary to the intention of the parties as expressed by the
plain language used and would amount to making a new contract for
the parties." Id. at 390, 150 S.E.2d at 145.
As recognized above, the consummation of a lease can be
sufficient consideration to support a promise to pay a sales
commission in the event that the leased property is purchased by
the tenant. Here, however, the sufficiency of the consideration
for Imperial Associates' promise to pay a sales commission was
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decided by the trial court on Imperial Associates' motion for
summary judgment. In considering a motion for summary judgment,
the trial court must adopt inferences from the facts alleged that
are most favorable to the nonmoving party, unless those
inferences are strained, forced, or contrary to reason. Renner
v. Stafford, 245 Va. 351, 353, 429 S.E.2d 218, 220 (1993); Carson
v. LeBlanc, 245 Va. 135, 139-40, 427 S.E.2d 189, 192 (1993).
Virginia Realty alleged in its motion for judgment that it
procured a four-year lease with Kaestner and Associates, and that
its services included assistance in the negotiation of that
lease. An inference can be drawn from the facts alleged that
Virginia Realty performed additional services beyond originating
the lease to consummate the lease executed by the parties. Thus,
at this stage of the proceedings, the legal requirement of
consideration was satisfied.
For these reasons, we will reverse the trial court's
judgment and remand this case for further proceedings consistent
with this opinion.
Reversed and remanded.
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