Sellers Acted in Bad Faith by Hiring New Broker

A broker prevails in a commission case involving an $8.5 million cattle ranch.

March 1, 2010

The owners of a sprawling Wyoming cattle ranch acted in bad faith by replacing their longstanding broker after he assembled a promising deal, and were wrong to deny him commission when the deal closed, the Supreme Court of Wyoming ruled in December.

In the case, Grommet v. Newman, the broker had worked with the ranch's owners for years to amass property that eventually grew to be contiguous with a Wyoming National Guard base. The owners put the ranch up for sale in 2003, listing it with the broker. The National Guard expressed interest in buying the property, but a purchase couldn't be worked out until funding was approved by the state legislature.

The broker's listing agreement expired in February 2006, yet he continued to represent the owners and remain in contact with the National Guard and the governor as the appropriations bill worked its way through the legislature. The funding was finally approved in March 2006, but later that month the owners sent a letter to the broker, officially terminating him as their agent.

The owners subsequently hired a different agent who agreed to work for a lower commission.

The following month, the National Guard agreed to buy the ranch for $8.5 million.

The original broker took the owners to trial court seeking payment of commission and attorney's fees. National Guard personnel testified that the broker had put the sale together; the only impediment was funding, and the National Guard immediately bought the ranch once funding was approved.

The trial court sided with the broker on the commission issue but not on the attorney's fees. Both parties appealed.

Wyoming's Supreme Court affirmed the trial court's award for the commission, saying the owners breached the implied duty of good faith inherent in every contract. It also directed the owners to pay the broker's legal costs because the owners had violated express terms in the contract.

Robert Freedman

Robert Freedman is the former director of multimedia communications at NAR.