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Bryant Real Estate v. Toll Brothers Inc, 03-1995 (2004)

Court: Court of Appeals for the Fourth Circuit Number: 03-1995 Visitors: 33
Filed: Aug. 10, 2004
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT BRYANT REAL ESTATE, INCORPORATED; ROBERT A. WILES AND COMPANY, INCORPORATED, Plaintiffs-Appellants, No. 03-1995 v. TOLL BROTHERS, INCORPORATED, Defendant-Appellee. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Leonard D. Wexler, Senior District Judge, sitting by designation. (CA-02-1311-A) Argued: May 6, 2004 Decided: August 10, 2004 Before WILKINS, Chief Judge, WILLIAMS, C
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                         UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


BRYANT REAL ESTATE, INCORPORATED;      
ROBERT A. WILES AND COMPANY,
INCORPORATED,
              Plaintiffs-Appellants,
                                                No. 03-1995
                 v.
TOLL BROTHERS, INCORPORATED,
               Defendant-Appellee.
                                       
           Appeal from the United States District Court
        for the Eastern District of Virginia, at Alexandria.
 Leonard D. Wexler, Senior District Judge, sitting by designation.
                         (CA-02-1311-A)

                        Argued: May 6, 2004

                      Decided: August 10, 2004

    Before WILKINS, Chief Judge, WILLIAMS, Circuit Judge,
         and C. Arlen BEAM, Senior Circuit Judge of the
      United States Court of Appeals for the Eighth Circuit,
                      sitting by designation.



Affirmed by unpublished per curiam opinion.


                            COUNSEL

ARGUED: Elizabeth Anne Keith, ODIN, FELDMAN & PITTLE-
MAN, P.C., Fairfax, Virginia, for Appellants. David Glenn Barger,
WILLIAMS, MULLEN, CLARK & DOBBINS, McLean, Virginia,
2               BRYANT REAL ESTATE v. TOLL BROTHERS
for Appellee. ON BRIEF: Dexter S. Odin, Heather D. Dawson,
ODIN, FELDMAN & PITTLEMAN, P.C., Fairfax, Virginia, for
Appellants. Francis E. Purcell, Jr., WILLIAMS, MULLEN, CLARK
& DOBBINS, McLean, Virginia, for Appellee.



Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).


                              OPINION

PER CURIAM:

   Bryant Real Estate, Inc. (Bryant) and Robert A. Wiles and Com-
pany, Inc. (Wiles), plaintiffs, appeal the district court’s decision to
enter judgment for defendant Toll Brothers, Inc. (Toll). They argue
the district court erred in basing its decision on defenses that were not
properly before the court. We affirm.

                                   I.

   Bryant and Wiles are real estate brokerage firms. They are princi-
pally operated by their namesakes who are licensed real estate brokers
in Virginia. Toll is a large residential real estate developer. In late
1999, Bryant asked Toll if it was interested in purchasing a parcel of
property that was adjacent to a tract already owned by Toll. At that
time, Bryant and Wiles portrayed themselves as brokers for the seller,
though they had not yet been employed by the property owners. Bry-
ant and Wiles said they suspected the property could be purchased for
$26.5 million, including a 6% brokerage commission that would be
paid by the sellers.

   In May 2000, Bryant again met with Toll. Bryant said the sellers
would not pay a commission, so Toll would have to pay the brokerage
fee if it wanted Bryant and Wiles’ assistance. Toll agreed to employ
Bryant and Wiles as its brokers (i.e., as buyer-brokers) and agreed to
pay Bryant and Wiles $800,000 for their services if the deal went
                BRYANT REAL ESTATE v. TOLL BROTHERS                    3
through. A May 10, 2000, fax from Bryant and Wiles to Toll referred
to this fee as a "brokerage fee" and anticipated Toll’s purchase at $25
million, plus the $800,000 fee. The parties did not discuss a termina-
tion date.

   A few days later, Toll drafted an "agreement of sale" and sent it to
Bryant and Wiles, with directions to submit the offer to the property
owners. Bryant and Wiles submitted the offer, but it was rejected. A
competing purchaser, Centex, successfully negotiated a sales contract
with the property owners in September or October 2000. Bryant and
Wiles were uninvolved from that point on. In February 2001, the Cen-
tex deal fell through and Toll purchased the property for $26 million
without Bryant and Wiles’ assistance.

   After Toll refused to pay Bryant and Wiles the $800,000 that they
felt was due, they filed suit, claiming breach of contract and unjust
enrichment.1 Toll answered by denying the allegations of plaintiffs’
full performance and entitlement to payment under the May 10, 2000,
contract.

   In discovery, Bryant and Wiles submitted an interrogatory that
asked Toll to identify its bases for denying the complaint’s operative
contract-claim allegations. On January 9, 2003, Toll deposed Bryant
and Wiles and asked them questions regarding the contract’s termina-
tion date. Toll also asked Wiles if he knew that brokerage relation-
ships expired after ninety days under Virginia law if no definite
termination date was stated in the contract. Discovery closed on Janu-
ary 10, 2003. On January 15, 2003, Toll responded to Bryant and
Wiles’ interrogatory, generally referring Bryant and Wiles to the Jan-
uary 9th deposition of Toll’s agent, but that deposition did not men-
tion the ninety-day statutory sunset provision. On January 29, 2003,
Toll amended its interrogatory answer, stating for the first time its
position that the agreement had terminated because the contract did
not have a definite termination date and, by statute, all brokerage rela-
tionships without such dates terminate after ninety days. Va. Code
Ann. § 54.1-2137(B).
  1
   Bryant and Wiles have not raised the unjust-enrichment claim in this
appeal.
4               BRYANT REAL ESTATE v. TOLL BROTHERS
   On February 6, 2003, Toll moved for summary judgment, asserting
that the contract had terminated under the Virginia statutes before the
brokers performed.2 Because the trial date was scheduled for February
19, 2003, Toll added a motion requesting an expedited hearing or a
continuance. Bryant and Wiles opposed the expedited-hearing/
continuance motion on February 12, 2003, arguing the pleadings did
not raise the statutory defense and there was insufficient time to
address it before trial. The district court denied the motion on Febru-
ary 14, 2003, noting that the defendant’s "underlying summary judg-
ment motion was untimely noticed." Even though it had been denied,
Toll replied to Bryant and Wiles’ opposition to the expedited-
hearing/continuance motion on February 19, 2003 (the original trial
date), and alternatively requested leave to amend or supplement its
answer. The district court never ruled on the underlying summary
judgment motion or the motion to amend.

   A three-day bench trial began on February 22, 2003.3 While Bryant
and Wiles argued throughout the case that the statutory defense was
not properly before the court, they made no relevancy objections to
evidence that tended to support the allegations. At the conclusion of
the testimony, the district court instructed the parties to close the case
with briefs. Toll again urged the statutory defense it had included in
its summary judgment motion, and Bryant and Wiles continued to
argue that it was not properly before the court and, even if it was, the
contract between the parties was not a "brokerage agreement," con-
trolled by the statute, but rather a "fee agreement."

   The trial court found: the contractual relationship between the par-
ties began on May 10, 2000; the contractual relationship was a "bro-
kerage relationship" under Virginia law; and the brokerage
relationship terminated on August 10, 2000, long before Toll pur-
chased the property or had an enforceable contract to purchase it. The
    2
    Toll’s summary judgment motion on the contract claim was also
based on the statute of frauds, fraudulent inducement, and breach of stat-
utory and regulatory duties. Bryant and Wiles claimed below and argue
here that all of those defenses were waived because they weren’t pled.
We decline to discuss these other defenses because we find the ninety-
day termination statute dispositive.
  3
    Trial was delayed three days because of inclement weather.
                 BRYANT REAL ESTATE v. TOLL BROTHERS                        5
trial court also found that Bryant and Wiles had breached several obli-
gations they owed Toll, excusing Toll from any duty to pay.4

   Bryant and Wiles appeal. Jurisdiction was proper in the district
court under 28 U.S.C. § 1332, and it is proper here under 28 U.S.C.
§ 1291.

                                     II.

   Bryant and Wiles’ appeal does not go to the merits of its contract
claim. Rather, Bryant and Wiles argue that the district court erred in
basing its ruling on arguments and defenses that cannot be found in
Toll’s answer.

   First, Bryant and Wiles argue that the district court should not have
allowed Toll to "rely upon a contract other than that pled by Bryant
and Wiles." We find no merit in this argument. Bryant and Wiles’
theory of the case was that they had agreed to provide brokerage ser-
vices to Toll in exchange for an $800,000 "brokerage fee" payable
when Toll purchased the property. They tried to prove that they per-
formed the contemplated services, and that Toll purchased the prop-
erty. Toll countered that this contract was regulated by Virginia law,
and under certain Virginia statutes, Bryant and Wiles could not claim
their fee. See Va. Code Ann. §§ 54.1-2100 to 2144.

   There was only one contract involved in this case—a promise to
pay a brokerage fee in return for brokerage services if Toll purchased
the property. The dispute centers on the character of that contractual
relationship. Whether that relationship was a "brokerage relationship"5
implicating the Virginia statutes was a question the district court
properly reached notwithstanding the state of the defendant’s answer.
  4
    It is unnecessary to evaluate the other defenses the district court relied
on given our disposition of this case.
  5
    Va. Code. Ann. § 54.1-2130 defines "brokerage relationship" as "the
contractual relationship between a client and a real estate licensee who
has been engaged by such client for the purpose of procuring a seller,
buyer, option, tenant, or landlord ready, able, and willing to sell, buy,
option, exchange or rent real estate on behalf of a client."
6               BRYANT REAL ESTATE v. TOLL BROTHERS
   Bryant and Wiles next argue that the district court erred in allowing
Toll to introduce affirmative defenses at the eleventh hour. Specifi-
cally, they object to Toll’s allegation that under Virginia law, a bro-
kerage relationship expires after ninety days unless the parties agree
to some other definite termination date. Va. Code. Ann. § 54.1-
2137(B). There was no mention of a termination date in any contract
related to this case, and the district court thus held that the parties’
contractual relationship had expired. We have heard no argument
questioning the validity of the defense if it was properly raised. So
our inquiry focuses on whether the defense fell within or had been
waived under Federal Rule of Civil Procedure 8(c).

   Federal Rule of Civil Procedure 8(b) permits general or specific
denials of a plaintiff’s averments. Under a general or specific denial,
a defendant is entitled to offer evidence that tends to rebut any allega-
tion for which the plaintiff retains the burden of proof.

   Rule 8(c), on the other hand, requires that all "avoidance or affir-
mative defense[s]" be affirmatively pled in the answer. We have
defined these defenses as "the defendant’s assertion raising new facts
and arguments that, if true, will defeat the plaintiff’s . . . claim, even
if all allegations in the complaint are true. Generally speaking, affir-
mative defenses share the common characteristic of a bar to the right
of recovery even if the general complaint were more or less admitted
to." Emergency One, Inc. v. American Fire Eagle Engine Co., 
332 F.3d 264
, 271 (4th Cir. 2003) (citation and quotation marks omitted).
The question of whether the ninety-day statutory provision constitutes
an avoidance or affirmative defense is vexing and, despite the gener-
ality of our definition, turns on a number of factors. See generally 5
Charles Alan Wright & Arthur R. Miller, Federal Practice & Proce-
dure § 1271 (1990 & Supp. 2004). How the defense is treated under
state law is relevant, but not binding, in a diversity case. 5 
id. at §§ 1271
& 1272.

   The Virginia state courts have not addressed the statute at issue, so
we have little guidance as to how it operates in a broker’s suit
demanding payment for brokerage services. It is possible that this
ninety-day limitation is not an affirmative defense at all. Three exam-
ples, of many, appear. First, one could read the statute as setting forth
a requirement that must be read into all brokerage contracts. Cf.
                BRYANT REAL ESTATE v. TOLL BROTHERS                     7
Immer & Co. v. Brosnahan, 
152 S.E.2d 254
, 257 (Va. 1967) (involv-
ing a workers’ compensation statute that must be read into the
employment contract)(citing Glassco v. Glassco, 
77 S.E.2d 843
, 844
(Va. 1953)); Am. Bonding Co. v. Am. Surety Co., 
103 S.E. 599
, 602-
03 (Va. 1920) (involving insurance statutes that must be read into the
parties’ contract). As a contract term, the provision seems to refine
the performance due under the contract by establishing the time frame
in which the broker’s performance will trigger the client’s duty to
pay. Toll denied the plaintiffs’ performance allegation, and this seems
sufficient to put at issue the terms of that performance.

   Second, the statutory provision may simply place in repose what-
ever contractual relationship exists, once ninety days has passed. Toll
clearly denied the contract’s existence, and this fairly raised the issue
of whether it had been vitiated by operation of law.

   Third, in the brokerage context, it could be that when Toll engaged
Bryant and Wiles, it made an offer for a unilateral contract, accept-
able by performance—procuring a seller willing to sell on the buyer’s
terms.6 See Hummer v. Engeman, 
141 S.E.2d 716
, 719 (Va. 1965)
(holding that a listing agreement was merely an offer of a unilateral
contract). If that is the case, then the ninety-day statutory provision
seems to extinguish the offer after the period elapses. In any event,
Toll clearly denied the existence of the contract and could surely offer
evidence of lack of acceptance to substantiate that defense.

   We need not determine whether this timeliness issue is something
the defendant should be required to affirmatively plead or whether it
is something the plaintiff should be charged with proving as an ele-
ment of (or at least anticipating as an issue in) its cause of action.
Even if the ninety-day statute is an affirmative defense that Toll
should have raised in its answer, a defense is not waived unless the
plaintiff suffers "unfair surprise or prejudice." Brinkley v. Harbour
  6
   Interestingly, the performance contemplated (whether it be under the
contract or as an acceptance of an offer) involved a purchase price of $25
million plus an $800,000 fee. Bryant and Wiles never did get the seller
to accept those terms. Instead, Toll purchased the property for $26 mil-
lion. But because the parties have framed this appeal around the pleading
issue, we are not inclined to go further.
8               BRYANT REAL ESTATE v. TOLL BROTHERS
Recreation Club, 
180 F.3d 598
, 612 (4th Cir. 1999) (collecting
authorities). The district court found that Toll’s "defenses were raised
sufficiently before and during trial." Regarding a plaintiff’s prejudice
or a defendant’s delay, the district court is in the best position to
determine the propriety of a particular defense. Thus, our review will
be limited to the question of whether the district court abused its dis-
cretion in concluding that Toll had not waived the ninety-day defense.
Cf. id.; S. Wallace Edwards & Sons, Inc. v. Cincinnati Ins. Co., 
353 F.3d 367
, 373 (4th Cir. 2003).

   Here, there was no abuse of discretion. Bryant and Wiles showed
no unfair surprise or prejudice. Toll first mentioned the ninety-day
limitation in a deposition. It then revised its interrogatory answers to
expressly mention the defense. It later included the defense in a
motion for summary judgment and a motion to amend its answer. At
no time did Bryant and Wiles ask the court for a continuance or seek
further discovery. And Bryant and Wiles had a full opportunity to
argue the issue in the final briefing of the case.

   The prejudice our decisions and the Rules contemplate is not pres-
ent in all cases where the defense prevails. Rather, the unfairness
must come from the timing, not the defeat. With regard to the ninety-
day provision, Bryant and Wiles have enumerated no legal arguments
they would have made had they had more time to consider and
respond to the defense. They have also identified no further discovery
that may have enabled them to overcome the defense.7

   On the other hand, Toll knew of this defense as early as Wiles’
deposition, yet it did not amend its answer. In fact, there were no facts
that arose in discovery that gave rise to this defense; the plaintiffs
    7
    We stress that a clearly successful affirmative defense is not beyond
the reach of Rule 8(c) and our waiver jurisprudence. In this case, we sim-
ply hold that the district court did not abuse its discretion. Had the dis-
trict court ruled the defense was waived, it may also have acted within
its discretion.
   As a practical matter, we realize that the late introduction of a clearly
successful defense disserves both the parties and the court by prolonging
litigation. But we doubt that, in the run of cases, a rule must be invoked
to encourage parties to promptly raise clearly successful defenses.
                 BRYANT REAL ESTATE v. TOLL BROTHERS                       9
admitted the time of the agreement in their complaint. The amended
interrogatory answers also came quite late in the discovery process.8
And perhaps the most troublesome aspect is that Toll simply points
to the plaintiffs’ lack of prejudice. Toll makes no effort to explain its
delay or to demonstrate that its answer was sufficient because the
defense fell beyond the reach of Rule 8(c).

   In sum, we are left with plaintiffs who suffered little (if any) preju-
dice and a defendant who has no excuse for its conduct. While it is
true that a defendant who seeks to introduce an affirmative defense
at the last minute will usually find himself in a perilous position, we
are unwilling to second-guess the district court under the circum-
stances of this case. The district court did not abuse its discretion by
finding that Toll had not waived the ninety-day defense.

   One final matter remains: Toll’s answer still does not include the
statutory mandate as a defense. Insofar as this is an affirmative
defense, Rule 15(b) states two methods for amending pleadings. First,
if issues not raised by the pleadings are tried by express or implied
consent of the parties, then the pleadings are simply regarded as being
amended. Fed. R. Civ. P. 15(b) (first two sentences). Second, if a
party objects to evidence at trial (i.e., if a party does not consent to
the trial of the issue), then the trial court is required to amend the
pleadings if, among other things, "the objecting party fails to satisfy
the court that the admission of such evidence would prejudice the
party in maintaining the party’s action . . . upon the merits." 
Id. (last two sentences).
In this case, we see no evidence in the record that is
relevant to the ninety-day defense to which an objection should have
been made. It would be odd, then, to imply Bryant and Wiles’ consent
from their failure to object. And we do not think the record in this
case otherwise supports a finding of consent, implied or express. But
the lack of prejudice brings this case within the second part of Rule
15(b).
   8
     Bryant, Wiles, and Toll were also left to wonder about what claims
would be addressed at trial. It appears the court conducted a final pretrial
conference under Rule 16(d) but issued no subsequent order pursuant to
Rule 16(e). Rule 16(e) is mandatory, and generally that order supersedes
the pleadings and sets the issues for trial. We do not think this irregular-
ity inures to the benefit of either party, but the entry of such an order may
have clarified matters substantially.
10             BRYANT REAL ESTATE v. TOLL BROTHERS
   Even though the Federal Rules of Civil Procedure do not expressly
give us the power to amend the pleadings, it is not necessary to
remand the case for a formal amendment. Because the district court
was required to make the amendment, and by its disposition treated
the pleadings as having been amended, we regard the defendant’s
answer as having been constructively amended.

                                                        AFFIRMED

Source:  CourtListener

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