Jones Lang LaSalle Americas, Inc. v. The Hoffman Family, LLC et al
MEMORANDUM OPINION. Signed by District Judge Anthony J Trenga on 4/4/14. (gwalk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
JONES LANG LaSALLE AMERICAS, INC.,
Case No. l:13-cv-01011 (AJT/JFA)
THE HOFFMAN FAMILY, LLC, et al.9
Plaintiff Jones Lang LaSalle Americas, Inc. ("JLLA") seeks $6.62 million in commission
payments based on the lease of commercial space owned by one of the defendants, located in
Alexandria, Virginia, which will become the headquarters for the National Science Foundation
("NSF"). This matter is before the Court on cross motions for summary judgment [Doc. Nos. 34
and 48]. The Court held a hearing on these motions on March 4, 2014, following which it took
the motions under advisement. Upon consideration of the parties' cross motions for summary
judgment, the memoranda and exhibits filed in support thereof and in opposition thereto, and the
arguments of counsel at the hearing held on March 4, 2014, and for the reasons stated herein, the
plaintiffs motion will be DENIED and the defendants' motion will be GRANTED.1
1On August 16,2013, plaintiff filed its Complaint [Doc. No. 1] against defendants, alleging
breach of contract and requesting a declaratory judgment. On November 4, 2013, with leave of
Court, the plaintiff filed its Amended Complaint [Doc. No. 26], to which defendants' provided
their Answer [Doc. No. 27] on November 8, 2013. Discovery closed on January 10, 2014 and on
January 21,2014, the parties filed their cross motions for summary judgment. Following its
hearing on March 4, 2014, by Order [Doc. No. 87] dated March 10, 2014, the Court vacated the
trial date, then scheduled for March 24, 2014, to be rescheduled, if necessary, following the
Court's ruling on the parties' cross motions for summary judgment.
The following is undisputed:
In August 2007, the parties signed a Leasing Agreement (the "Agreement"), pursuant to
which the defendants, The Hoffman Family, LLC and Hoffman Buildings, L.P.,2 retained the
services of JLLA to act as their "exclusive leasing agent" for certain properties located in
Alexandria, Virginia.3 One ofthe properties listed in the Agreement, 2401 Eisenhower Avenue,
Alexandria, Virginia, is the site of the building to be built and leased to the NSF (the "NSF
property") pursuant to a leasing agreement that was executed on June 7,2013 (the "NSF Lease").
JLLA seeks a commission under the terms of the Agreement based on the NSF Lease.
On April 7,2011, the General Services Administration ("GSA") solicited Expressions of
Interest ("EOI") for the NSF Lease, Solicitation No. 9VA2433. JLLA assisted the defendants in
compiling the information necessary to complete a properresponse to this EOI solicitation, and
on April 27, 2011, on behalfof Hoffman, submitted an EOI to Studley, Inc. ("Studley"), the
brokerfor the GSA. On July 24, 2012, JLLA submitted a second EOI on behalf of Hoffman.
On December 4,2012, following its solicitation of EOIs, the GSA issued a formal
Request for Lease Proposal ("RLP"), and offerors were required to submit their Initial Proposals
2Unless stated otherwise, there is no need for the Court to distinguish between the defendants,
even though they did not always act jointly, as in the signing of the NSF Lease and related
documents. Thus, unless otherwise noted, the Court will refer to the defendants both
individually and jointly as "Hoffman."
3The Agreement was amended in July, 2008, but those amendments are immaterial tothe
parties' dispute. Other amendments were proposed but never executed. In addition, Hoffman
contends that pursuant to an oral agreement reflected in various submissions to the GSA and
elsewhere, the parties agreed to a $1 million commission with respect to the NSF lease rather
than the 2% commission prescribed under the Agreement. JLLA disputes that it ever agreed to
the $1 million commission. Given the Court's disposition of the case, there is no need to consider
the legal and factual issues raised by Hoffman's contention.
on or before January 9, 2013. On January 9, 2013, JLLA, on behalf of Hoffman, delivered to the
GSA (via Studley) a formal lease proposal signed by Hoffman. On March 7, 2013, Hoffman
itself sent a Final Proposal Revision, signed by Hoffman, directly to the GSA, through Studley.
After the Final Proposal was submitted, further negotiations took place between Hoffman
and Studley directly without JLLA's involvement.4 On May 23, 2013, Hoffman signed the NSF
Lease, as finalized by the GSA and Hoffman.
Shortly after the NSF Lease was signed, the parties' dispute arose over JLLA's
commission with respect to the NSF lease. JLLA claimed that, pursuant to the Agreement, it
was owed a commission equal to 2% of the NSF Lease's "base rent" of more than $330 million
over the 15-year period of the NSF Lease, or a commission in the amount of approximately
$6.62 million. Hoffman claimed that the total commission owed to JLLA was $1 million, based
on what it claimed were oral agreements that were reflected in the written submissions made to
the GSA and elsewhere. The parties were unable to resolve this dispute and JLLA filed this
action on August 16, 2013, in which it seeks a commission solely under the terms of the
Agreement. During the course of discovery in this action, Hoffman learned for the first time that
certain of JLLA's employees involved in the NSF leasing effort were not licensed as real estate
salespersons or brokers and now claims that JLLA is not entitled to receive any commission.
Both parties have moved for summary judgment. JLLA claims that, based on the
undisputed facts, it is entitled to recover the commission set forth in the Agreement as a matter of
law since the Agreement was never terminated and JLLA was the procuring cause ofthe NSF
4JLLA represented property owners competing for the NSF Lease other than Hoffman; and
because of this disclosed conflict on the part of JLLA, GSA and Studley made the decision to
deal with Hoffman directly, rather than through JLLA.
lease. Hoffman seeks summary judgment on JLLA's claim on the grounds that the Agreement,
having no "definite termination date" as required under Va. Code Ann. § 54.1-2137B, expired 90
days after its execution, long before any entitlement to any commission arguably arose; and that,
in any event, as a matter of public policy JLLA is prohibited from recovering any commission
that may be payable under the Agreement since certain of its employees involved in the NSF
leasing effort were not licensed as required under Virginia law.
Summary judgment should be granted where the record shows that "there is no genuine
dispute as to any material fact and the movant is entitled tojudgment as a matter of law." Fed.
R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). In
considering a motion for summary judgment, the court is required to view the facts and draw
reasonable inferences in the light most favorable to the nonmoving party. Bryant v. BellAtlantic
Md, Inc., 288 F.3d 124,132 (4th Cir. 2002). Entry of summaryjudgment is appropriate where
the moving party demonstrates the lack of a genuine issue of fact for trial, and if that burden is
met, the partyopposing the motion must "go beyond the pleadings" and come forward with
evidence of a genuine factual dispute. CelotexCorp. v. Catrett, All U.S.317, 324 (1986).
"[T]he mere existence of some alleged factual dispute between the parties will not defeat an
otherwise properly supported motion for summary judgment." Anderson, 411 U.S. at 247-248.
Indeed, "[i]f the evidence is merely colorable, or is not significantly probative, summary
judgment may be granted." Id. at 249-50 (internal citations omitted).
Because Hoffman's motion, if granted, necessarily eliminates JLLA's legal ability to
recover on its claim, the Court will first consider the issues presented in that motion. Those
issues are: (1) whether under Va. Code Ann. § 54.1-2137 the Agreement has a "definite
termination date"; (2)whether JLLA's unlicensed employees involved in the NSF leasing efforts
were "brokers" or "salespersons" within the meaning of Va. Code Ann. § 54.1-2107, suchthat
they were required to have the requisite licenses pursuant to Va. Code Ann. § 54.1-2106.1; and
(3) whether the involvement of any unlicensed JLLA employees in the NSF leasing effort
precludes JLLA, which possessed a valid broker's license, from receiving a commission under
A. Whether the Agreement has a "definite termination date"
Va. Code Ann. § 54.1-2137 states in pertinent part:
A. The brokerage relationships set forth in this article shall commence at the time
that a client engages a licensee and shall continue until (i) completion of
performance in accordance with the brokerage agreement or (ii) the earlier of (a)
any date of expiration agreed upon by the parties as part of the brokerage
agreement or in any amendments thereto, (b) any mutually agreed upon
termination of the brokerage agreement, (c) a default by any party under the terms
of the brokerage agreement, or (d) a termination as set forth in subsection F of §
B. Brokerage agreements shall be in writing and shall:
5Although not raised or briefed bythe parties, the Court has considered as aninitial matter
whether Va. Code Ann. § 54.1-2137(B), imposing the "definite termination requirement,"
applies to the Agreement or can constitutionally be applied to the Agreement underthe Contract
Clause of the U.S. Constitution, Article I, Section 10, clause 1. The Agreement was entered into
in 2007. Subsection B was passed in 2011 and made effective on July 1, 2012. It does not, by its
terms, apply retroactively. Nevertheless, the Court concludes that since the Agreement was
renewed after the effective date of Subsection B and before the signing of the NSF Lease, which
triggered any obligation for a commission under the Agreement, Subsection B applies to the
Agreement and there is no constitutional impediment to its application.
6Subsection F of § 54.1-2139 statesthat "[n]o cause of action shall arise against a dual agent or
dual representative for making disclosures of brokerage relationships as provided by this article.
A dual agent or dual representative does not terminate any brokerage relationship by the making
of any such allowed or required disclosures of dual agency or dual representation."
1. Have a definite termination date; however, if a brokerage agreement does not
specify a definite termination date, the brokerage agreement shall terminate 90
days after the date of the brokerage agreement;
The provisions of the Agreement that bear on whether the Agreement has a "definite termination
date" are set forth in Sections 1.1, 2.1, 2.2, and 2.3 ofthe Agreement.7 Those provisions, in
effect, cause the Agreement to continue until an uncured default occurs or until one party
provides the required notice of termination or the removal of a property from the Agreement.
JLLA contends that the Agreement does not run afoul of Section 54-2137 since it has a
"definite termination date," i.e., the date determined through one of the specified termination
mechanisms. Hoffman contends that the Agreement has no "definite termination date" since it is
impossible to determine from the face of the Agreement a specific date certainon which the
Agreement will, in fact, terminate. Rather, the termination date necessarily depends on
contingencies that cannot be predicted with any precision; and it is possible that the Agreement
would never terminate according to its terms.
Whether the Agreement has a "definite termination date" is an issue of Virginia law. In
determining how to construe that requirement, the Court must therefore look to and apply the
7Section 1.1, titled "List of Properties," states that anyparticular property may be "removed at
any time from the scope of this Agreement upon ninety (90) days prior written notice from the
Owner and the Property may be expanded upon and added to at any time hereafter upon the
mutual written consent of Owner and Leasing Agent." Section 2.1, titled "Initial Term", states
that "Leasing Agent's duties and responsibility under this Agreement shall begin on the 1st day
of January, 2007 and shall end on December 31,2007, unless sooner terminated as provided
herein." Section 2.2, titled "Renewal Term", provides that the Agreement "shall automatically
be renewed for additional one (1) year terms," unless written notice of termination is provided by
either party not less than 60 days before the end of the one year term then in effect. Section 2.3,
titled "Termination", provides for termination under certain circumstances, including default
with notice and an opportunity for cure; sale of any property covered under the Agreement, with
30 days' notice of the sale, but only as to that sold property; or at any point, upon 60 days' notice
by either party.
pronouncements of the Supreme Court ofVirginia. The Supreme Court of Virginia, however,
has not spoken directly to the issue raised in this case, and thus the Court must predict as best it
can how that Court would decide the issue. Ellis v. Grant Thornton LLP, 530 F.3d 280, 287 (4th
Cir. 2008). In making such a determination, the decrees of lower Virginia state courts should be
"attributed some weight" and given "proper regard," although their decisions are not controlling
and "may be disregarded if the federal court is convinced by other persuasive data that the
highest court of the state would decide otherwise." See C.I.R. v. Bosch's Estate, 387 U.S. 456,
465, 87 S. Ct. 1776, 1782, 18 L. Ed. 2d 886; see also, Private Mortgage Inv. Servs., Inc. v. Hotel
& Club Associates, Inc., 296 F.3d 308, 312 (4th Cir. 2002). The only lower Virginia state court
decision brought to the Court's attention to consider this issue directly is Piedmont Associates,
Inc. ofN. Carolina v. Little, 49 Va. Cir. 488 (1999).
Piedmont Associates considered a brokerage contract that terminated upon the sale of five
to-be-built homes. There, a Virginia Circuit Court found that".. .the Legislature did not intend
or mean this statute [Va. Code Ann. § 54.1-2137] to require that every brokerage contract have a
date certain (i.e., a month, day and year) on which it terminates, but that a brokerage contract
needs to have only a stated date or the occurrence of a specified event from which a fact finder
can reasonably determine if contractual obligations have been timely fulfilled." Id. Such a
contract, the Circuit Court concluded, was "exactly the type of contract that was entered into in
this case in which the plaintiff arguably gave consideration for the exclusive right to sell the first
five homes, but that no specific time was set down in which the homes would have to be built
and then sold." Id. As to legislative intent, the Circuit Court found that "the Legislature clearly
appears to have contemplated that parties can enter into brokerage contracts which have as their
termination point the occurrence of a certain event or events." Id.
JLLA points to Piedmont Associates as support for its position that in order have a
"definite termination date" a brokerage agreement need only have a determinable date of
termination through a stated mechanism; and that, like the contract in Piedmont Associates, the
Agreement has a specified event, i.e., a notice of termination or uncured default date, from which
one can determine precisely when the Agreement terminates. Defendants question whether
Piedmont Associates was correctly decided, but in any event attempt to distinguish Piedmont
Associates on the grounds that the agreement there, unlike the Agreement here, would terminate
on a specific date tied to the occurrence of a specific event, known in advance, such that there
was, in effect, a date certain on which the agreement would terminate, whereas here the
Agreement would automatically renew each year, with no ability to determine whether it would
ever terminate. Forthe purposes of determining whether the Agreement has a "definite
termination date," the Court finds little material difference between the agreement in Piedmont
Associates and the Agreement here: both fail to specify in the agreement itself the specific date
on which the brokerage agreement will end, but rather specify certain events that determine
whether the agreement has ended and if so on which precise date.8 The Court has therefore
attributed some weight and given proper regard for the decision in Piedmont Associates.
8Perhaps for these reasons, Hoffman relies more heavily on Mayo, Hysore &Co. v. Philadelphia
Textile Machinery Co., 105 Va. 486, 486 (1906), which pre-dated the passage of the Va. Code
Ann. § 54-2137(B) by over one hundred years. In that case, the Virginia Supreme Court
characterized a construction contract as a contract "of indefinite duration, unless six months'
notice of withdrawal was given by one of the parties." Based on this case, Hoffman arguesthat
the Virginia Supreme Court would likely conclude that the Agreement has no definite
termination date since, like the construction contract in Mayo, the Agreement continues until
notice of termination is given. The Court finds little support for Hoffman's position based on
Mayo. In fact, there is nothing in Mayo that suggests that the Virginia Supreme Court would
conclude that because a contract is a contract of indefinite duration unless notice oftermination
is given, it is necessarily a contract without a "definite termination date" where the contract
specifies the date on which it terminates through notice.
The Court concludes that the term "definite termination date" in Subsection B of Va.
Code Ann. § 54-2137 refers to a date calculable under one of the mechanisms set forth in
Subsection A and that, by that measure, the Agreement has a "definite termination date"—a date
that can be calculated through one of the termination mechanisms set forth in the Agreement. In
reaching this conclusion, the Court has considered the text and structure of the statute as a whole
and the relationship Subsection B appearsto have to Subsection A. Viewed in that light, it
would appear that Subsection B was added to provide a date of expiration where no specific date
of expiration could be determined under the provisions of Subsection A. Accordingly, a
"definite termination date" would appear to include, at least, "any date of expiration agreed upon
by the parties as part of the brokerage agreement or in any amendments thereto" or "any
mutually agreed upon termination of the brokerage agreement." See Va. Code Ann. § 54.1-
2137(A)(ii)(a) and (b). Here, the Agreement has an expiration date agreed upon by the parties.9
9The Court also finds support for its construction of the statute in the regulations promulgated by
the Virginia Real Estate Board, the Virginia administrative agency charged with promulgating
regulations consistent with Title 54.1, Chapter 21 of the Virginia Code pertaining to real estate
brokers and salespersons. In that regard, 18Va. Admin. Code § 135-20-290 provides in
Actions constituting improper dealings include:
1. Entering a brokerage relationship that (i) does not specify a definite
termination date; (ii) does not provide a mechanism for determining the
termination date; or (iii) is not terminable by the client;
See also Va. Code Ann. § 54.1-2143 (requiring any regulations adopted by the Virginia Real
Estate Board to be consistent with Title 54.1, Chapter 21, Article 1, which includes Section 54.12137). Indeed, were Va. Code Ann. § 54-2137 a federal statute and the Virginia Real Estate
Board a federal agency, the Court would likely be required to extend Chevron deference to its
For the above reasons, the Court finds and concludes that the Agreement has a "definite
termination date" for the purposes of Va. Code Ann. § 54.1-2137(B) and therefore did not expire
after 90 days. As the parties agree that none of the termination provisions in the Agreement was
ever exercised, the Agreement was thus in effect at the time of the execution of the NSF Lease
and all other material times.
At all material times herein, JLLA held a valid broker's license. Nevertheless, Hoffman
contends that it would be against public policy for JLLA to recover a commission under the
Agreement since some of its employees who were involved in the NSF leasing effort and whose
activities JLLA relies on for its commission, including specifically Arthur M. Turowski, were
unlicensed real estate salespersons.10
Virginia law requires that "every employee or independent contractor who acts as a
salesperson" for a brokerage firm, such as JLLA, "holds a license as a real estate salesperson or
broker" and that "[n]o individual shall act as a broker without a real estate broker's license
from the Board." Va. Code Ann. § 54.1-2106.1 (A)(i) and (B). Moreover, every employee of a
brokerage firm who acts as a salesperson must hold a license as a real estate salesperson in order
for a business to obtain a broker's license.11 Va. Code Ann. § 54.1-2106.1 (A)(ii) and (C). "One
act for compensation of... leasing, or renting, or offering to rent real estate" triggers the
10 Hoffman also contends that JLLA employee Brian T. Saal was required to have a real estate
salesperson's license. Because Turowski was more directly and extensively involved in the NSF
leasing effort than Saal, the licensing issues raised by Hoffman can be disposed of without
consideration of Saal's need for a license.
"Real estate broker" is defined, in pertinent part, as any person or business entity who for
valuable compensation leases or offers to lease, or rents or offers for rent, any real estate or the
improvements thereon for others. Va. Code Ann. § 54-2100.
obligation to obtain a real estate broker's or salesperson's license. Va. Code Ann. § 54.1-2107.
"Real estate salesperson" is defined as:
...any person, ...who for compensation or valuable consideration is employed either
directly or indirectly by ... a real estate broker, to sell or offer to sell, or to buy or offer to
buy, or negotiate the purchase, sale or exchange of real estate, or to lease, rent or offer for
rent any real estate, or to negotiate leases thereof, or of the improvements thereon." Va.
Code Ann. §54.1-2101.
Following his retirement from the GSA, Turowski joined JLLA in October, 2007, after
the Agreement was executed, and held the title of Senior Vice President of JLLA. JLLA does
not contest that Turowski was unlicensed or that he was required under his employment
agreement with JLLA to obtain a license. Rather, it argues that he did not engage in activities
relative to the NSF leasing effort that required a license. This position rests primarily on JLLA's
view concerning the scope and nature of the activities that require a license. JLLA argues
essentially that a license is required only to make an offer to lease or to negotiate or enter into a
lease; and, since it is undisputed in this case that the actual formal offers to rent were made by
and in the name of Hoffman, the property owner, and Hoffman, not JLLA or any employee of
JLLA, negotiated and executed the actual NSF Lease, Turowski did not require a license to do
what he did in connection with the NSF leasing effort. Indeed, it would appearthat there was no
need for JLLA to be licensed, given its reading of the licensing requirements.
Whether Turowski required a license for his work on the NSF leasing effort must be
considered within the context of JLLA's business and the Agreement. There is no dispute that at
the time it entered into the Agreement, JLLA was in the real estate brokerage business and that
the Agreement was a "leasing agreement" under which JLLA would receive a commission for
providing brokerage services as Hoffman's "exclusive leasing agent." Hoffman clearlyengaged
JLLA for the purpose of locating and procuring tenants for the listed properties, one of which
was the site for the NSF Lease. See Agreement [Doc. 1-1] at 1, 4, 10. As the Agreement recites,
"the Owner [Hoffman] desires to engage Leasing Agent [JLLA] as its exclusive leasing agent for
all existing office space and all planned future office space for or on the Property and in
connection therewith to lease and market office space for the Property as the sole and exclusive
leasing agent having responsibility therefore, on the terms and conditions hereinafter set forth."
Id. at Recital B. Likewise, "Leasing Agent [JLLA] desires to accept such employment to
advertise, market, identify, solicit and have executed for the benefit of Owner, Leases for office
space at the Property, and is engaged in the business of leasing and marketing office space for
properties." Id. at Recital C. JLLA agreed that as Hoffman's "exclusive leasing agent" and
"exclusive broker for leasing of space," it "shall at all times have in its employ or contract for
sufficient personnel to enable it to lease and market each Property." Id. at 4.2.
Under the Agreement, JLLA, in its capacity as Hoffman's exclusive agent, assumed a
wide range of duties and responsibilities with respect to locating tenants and procuring leases.
More specifically, JLLA agreed to: (1) diligently investigate and develop any offers and inquiries
by prospective tenants referred to it by Hoffman or cooperating third party brokers; (2) canvas,
solicit, and otherwise employ its best efforts and services to lease space; (3) make every
reasonable effort to obtain tenants reasonably satisfactory to the owner; (4) as reasonably
possible, procure financial references from prospective tenants, investigate such references and
use its best judgment in the selection of prospective tenants; and (5) perform whatever
reasonable service may be required in connection with the negotiation of leases for office space
at the property. Id. at 4.4. JLLA is also authorized to cooperate with cooperating brokers. Id. at
4.7. With respect to lease forms, JLLA "shall from time to time assist [Hoffman's] counsel as
required in [Hoffman's] reasonable opinion, with suggested modifications and/or additions to
(including riders) or deletions from said form as are reasonably necessary in [Hoffman's]
opinion to conclude the transaction and such suited language must be customary in the market
where the applicable Property is located." Id. at 4.6.
The Agreement also specified particular duties and responsibilities with respect to
JLLA's services directed to procuring government tenants, including specifically the GSA.
Those services included: (1) assisting with the development of an overall strategy for positioning
the property site/building selection by the government; (2) coordinating the research of
competitive properties and competitive market data including the status of each property; (3)
identifying the evaluation factors the government might use in identifying a successful lease
offeror; (4) assisting in the development of responses to lease award evaluation factors; (5)
assisting in negotiation of the lease award and any amendments or modifications to such a lease
before government occupancy; (6) monitoring the award process at the government to assurethat
the award proceeds unimpeded; (7) facilitating communications between Hoffman's team and
government specialists, contract officers and brokers; and (8) assisting Hoffman's development
team with an understanding and thorough detailed interpretation of any "SFO or RFI"
requirement, "award metric," evaluation factor, and/or performance standard. Id. at 4.12.
Despite the breadth of JLLA's duties, Hoffman specified that all leases shall be in the name of
owner and executed by the owner. Id. at 4.4.
JLLA assigned Turowski to its team dedicated to discharging its obligations to Hoffman
with respect to the NSF property. As part of that assignment, he became centrally involved in
many of the leasing activities that the Agreement contemplated JLLA would perform as
Hoffman's exclusive leasing agent. He participated in identifying the NSF leasing opportunity,
bringing it to Hoffman's attention, and developing the successful strategy that resulted in GSA's
decision to competitively bid the NSF lease renewal and Hoffman's successful bid. That strategy
included working with Alexandria City officials as well as GSA personnel and GSA's broker, all
on behalf of Hoffman, for the purpose of marketing Hoffman's property and soliciting and
procuring the NSF lease. Although Turowski joined JLLA after the Agreement was entered into,
he later became JLLA's "relationship manager" for Hoffman; and in that capacity, he both
signed and delivered to GSA on behalf of Hoffman the EOIs, together with a letter he both wrote
and signed, on JLLA letterhead, which identifies him as the owner's agent to whom the
government's broker should direct any inquiries. See Doc. Nos. 7-1,48-15. He delivered
Hoffman's initial bid on January 9,2013, and initialed on behalf of the owner every page of the
proposed lease form. Turowski also prepared, for the signature of Michael Perine, an Executive
Vice President of Hoffman at the time, for delivery to the GSA, the "Authority to Represent
Letter" designating Turowski as the contact for Hoffman in the provision of brokerage services.
Doc. No. 51-12 at HF00000311. Following the submission of the Final Lease Proposal on
January 8, 2013, Turowski continued to pass on communications to Hoffman from the GSA and
was involved in the negotiations pertaining to the commission to be paid to GSA's broker,
Studley, something that needed to be settled before the leasing transaction could be finalized.12
In support of its position that Turowski did not need a license, JLLA relies centrally on
the definition of a "real estate salesperson. " See Va. Code Ann. § 54.1-2101 ("... 'real estate
salesperson' means any person .. .who.. .is employed to lease, rent or offer for rent any real
estate, or to negotiate leases thereof...."). Armed with this definition, JLLA points to certain
purported admissions by Hoffman for the proposition that Turowski did not do any of the
12 Asreflected in e-mails between Turowski, Hoffman and Studley, Turowski was not only
advising Hoffman concerning Studley's commission, but also communicating directly with
Studley on rates that would become part of the "Aggregate Lease Value."
activities that define a real estate salesperson, including that: (1) Hoffman, not JLLA, signed the
document that constituted the initial offer for rent on a GSA Form entitled "Proposal to Lease
Space" and also the Final Proposal Revisions making the Offer for Rent; (2) Hoffman, not JLLA,
was the "offeror" with respect to the NSF leased space; (3) Hoffman, not JLLA, "submitted" the
initial responses and final revised proposal to GSA; and (4) Hoffman, not JLLA, conducted lease
negotiations with the GSA and its broker Studley. However, none of these activities by Hoffman
insulated Turowski from the need to obtain a real estate salesperson's license.
JLLA's narrow, hyper-formalistic reading of the licensing requirements would effectively
eliminate the need for a license by most persons centrally involved in a leasing transaction on
behalf of an owner, as Turowski was for Hoffman here. Further, within the context of the
statutory scheme pertainingto licensure, the use of the words "lease," "offer" and "negotiate" in
the definition of a real estate salesperson are clearly intended to capture the realities and breadth
of activities that make up the leasing process, not the specific, more formal events necessary to
consummate a transaction. That intent is reflected in the wide-ranging activities that a licensee is
statutorily authorized, and obligated, to perform on behalf of an owner/landlord, including,
among others: (1) performing in accordance with the terms of a brokerage agreement; (2)
conducting marketing activities on behalf of the owner; (3) assisting the landlord in drafting and
negotiating leases and letters of intent to lease; (4) presenting written leasing offers to and from
the landlord; and (5) providing reasonable assistance to the landlord to finalize the lease
agreement. See Va. Code Ann. § 54.1-2133(A).
The sparse, pertinent Virginia case law also makes clear that terms such as "negotiate"
are to be construed broadly, not narrowly or technically. See Massie v. Dudley, 173 Va. 42, 50, 3
S.E.2d 176,179 (1939) ("...[Massie] contends that since he did not fix the price, nor make the
sale himself, he was not a broker. By some distinction, which we are unable to follow, he further
argues that such services as he rendered are not covered by the word 'negotiate.'"). Indeed, the
Agreement itself reflects the reality that a leasing agent, without authority to bind an owner, is
understood to be "leasing" space. Compare Agreement, Section 4.4 ("All Leases shall be in the
name of Owner and executed by Owner"); with Agreement, Recital C ("[JLLA] ... is engaged in
the business of leasing and marketing offer space for properties') and Section 4.2 ("[JLLA] shall
at all times have in its employ or contract for sufficient personnel to enable it to lease and market
each Property."). The broad range of activities for which a license is required is further
highlighted by the statutory description of what limited activities an employee of a broker may
engage in without a license. See Va. Code Ann. § 54.1-2103(C), whicheliminates the need for a
real estate salesperson's license for the following limited activities: "(i) exhibitingresidential
units on such real estate to prospective tenants, if the employee is employed on the premises of
such real estate; (ii) providing prospective tenants with factual information about the lease of
residential real estate; (iii) accepting applications for lease of such real estate; and (iv) accepting
security deposits and rentals for such real estate."
JLLA's position is also irreconcilable with its position that it was the "procuring cause"
of the NSF lease, entitling it to a commission. In order to be the "procuring cause" of the NSF
Lease, JLLA needed to act to "cause ... a series of events, which, without break in their
continuity, resulted] in the accomplishment of the prime object of the employment of the broker,
which is the procurement of a purchaser ready, willing and able to [lease] the real estate on the
owner's terms." Wilson v. Schmidt & Wilson, 184 Va. 642, 649 (1945). Here, it is difficult to
see how JLLA could be a procuring cause for a lease that entitled it to a leasing commission
without a license; and it is equally difficult to conclude that those who were significantly
involved in the activities that made JLLA a "procuring cause," such as Turowski, did not also
need a license.
For the above reasons, the Court concludes that Turowski was required to have a real
estate salesperson's license for his activities pertaining to the NSF lease and that he failed to be
licensed as required.
3. Consequences of Utilizing Unlicensed Personnel
Having concluded as a matter of law that Turowski was required to be licensed and that
he lacked the required license, the Court also concludes that JLLA is prohibited from receiving
any commission it would be entitled to receive under the Agreement, even though at all material
times herein it was licensed as a real estate broker.
There is no explicit statute or judicial
decision that imposes such a prohibition under Virginia law. However, based on public policy
declared by the Virginia courts, the Court easily concludes that Turowski's failure to have a
license precludes JLLA, as well as Turowski, from receiving any commission with respect to the
NSF Lease. Several settled propositions led to this conclusion.
First, Turowski's lack of licensure prohibits him from receiving a commission as a matter
of public policy. See Harrison & Bates, Inc. v. LSR Corp., 238 Va. 741, 745 (1989) ("It is well
established that, because a contract made in violation of the real estate licensing statutes is
illegal, an unlicensed agent cannot recover compensation for his services in negotiating a sale
under the contract."); see also Massie, 173 Va. at 51 ("The agreement upon which the plaintiffs
in error rely is illegal, not merely invalid. It is void as being contrary to a positive statute and to
public policy."). Second, JLLA's brokerage license did not cover Turowski or cure Turowski's
13 Although JLLA has not conceded that it isprohibited from recovery if Turowski were required
to be licensed, it has not affirmatively asserted in its briefings that Turowski's lack of any
required licensure does not preclude its recovery under the Agreement.
failure to obtain a license. Hancock Co., Inc. v. Stephens, 177, Va. 349, 352 and 355 (1941)
("...one real estate broker's license cannot license both a corporation and a person" and "[n]o
corporation can be granted a broker's license unless every officer and employee of the
corporation who actively participates in its real estate business shall hold a license as a real estate
broker or salesman."). Third, JLLA, in order to obtain its broker's license, was required to
certify that "every employee or independent contractor who acts as a salesperson for such
business entity holds a license as a real estate salesperson or broker." Va. Code Ann. § 54.12106.1(A). Fourth, at all material times, JLLA had a statutory duty of "reasonable and adequate
supervision," which included ensuring that its brokerage services were carried out in accordance
with the licensing requirements. See Va. Code Ann. § 54.1-2110.1(A) and (B)(3). Those
requirements mandated that Turowski hold a license in order to engage in the activities he
performed in connection with the NSF leasing effort. Under these circumstances, the Court
concludes that Turowski's lack of a real estate salesperson's license precludes JLLA from
recovering any commission under the Agreement.14
For the foregoing reasons, the Court finds and concludes that there are no genuine issues of
material fact and that defendants are entitled to judgment as a matter of law with respect to plaintiffs
claims. Plaintiffs motion for summary judgment will therefore be DENIED; and Defendants'
motion for summary judgment will be GRANTED and this action DISMISSED.
An appropriate Order will issue.
14 Because the Court concludes that Hoffman is entitled to summary judgment as to plaintiffs
claims, the Court must necessarily also deny plaintiffs motion for summaryjudgment.
United States District Judge
April 4, 2014
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?