Appellant real estate brokers sought review of the judgment from the Superior Court of Solano County, (California) which dismissed appellants’ cause of action for intentional interference with a prospective economic advantage against appellee buyers.

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Overview

Appellant real estate brokers located appellee buyers for an apartment building that was for sale. The proposed purchase agreements indicated that the sellers would pay appellants’ commission but the executed agreement provided that no commission was to be paid. Appellants argued that appellees orally agreed to pay them a commission. Appellants sued for interference with a prospective economic advantage. The trial court sustained appellees’ demurrer on the reasoning that the tort could not be applied against parties to the contract upon which the advantage was based. The court stated that generally where there was an understanding, albeit oral, that the seller was to pay a brokerage commission, a prospective economic relationship exists between only the seller and broker. The court continued that when an outside party, such as the buyer, intentionally disrupted that seller-broker relationship, a cause of action may lie for interference with a prospective economic advantage. The court stated that appellees disrupted the relationship when they orally agreed to pay the commission if the seller would reduce the purchase price and then failed to pay the commission as agreed.

Outcome

Trial court’s dismissal of appellant real estate brokers cause of action for interference with a prospective economic advantage was reversed and remanded. The court held that appellee buyers disrupted the agreement between the seller and appellants when they orally agreed to pay the commission for a lower purchase price.