Court Holds that a Broker Breached his Independent Contractor Agreement by Failing to

Register His Partner’s Business with the Department of Real Estate

In Thompson v. Asimos, a California appellate court held that a broker breached his independent contractor agreement with a business collaborator by failing to register the collaborator’s business with the Department of Real Estate (“DRE”).  In Thompson, plaintiff operated a consulting firm that assisted companies in colocation arrangements.  Plaintiff began collaborating with defendant, a real estate broker.  The partners operated under an independent contractor agreement used by real estate brokers and agents.  They later disagreed about the scope of plaintiff’s consulting activities and whether it required a real estate broker’s license.  Plaintiff eventually filed suit against defendant for breach of contract and related claims.  Among other claims, plaintiff asserted that defendant failed to register plaintiff with the DRE.  The lack of registration had resulted in problems with a particular transaction, as well as other issues.  At trial, the court granted judgment in favor of the plaintiff, awarding damages for commissions that were owed.  The defendant appealed arguing that under the parties’ agreement, he had no obligation to do anything other than remain a licensed real estate broker in good standing.

The court of appeal vacated the judgment, in part, holding that plaintiff was entitled to breach of contract damages, but in a lesser amount.  The court found that the language of the independent contractor agreement was ambiguous regarding whether defendant was bound to do more than keep his license in good standing.  The appellate court held that the available parole evidence supported the court’s interpretation.  That evidence included:  the standard form contract language; language prepared by the parties; their custom and practice; and conduct.  The appellate court held that the trial court’s findings upheld the court’s findings, but reduced the award to 85%.

Shannon B. Jones

sbj@sbj-law.com