By: Erica Stutman
A.R.S. § 32-2152 allows a real estate broker or salesperson to file a court action to collect earned compensation if he was a “qualified licensed broker or salesperson at the time the claim arose.” In Focus Point Prop., LLC v. Johnson, 689 Ariz. Adv. Rep. 4 (June 19, 2014), plaintiff Cleo Johnson tested the meaning of a “qualified” licensee, arguing that her salesperson was not entitled to his commission because his license could have been revoked at the time he performed his services.
In 2009, Johnson, trustee of a trust, hired Jeff Kantor from Focus Point Properties to sell a commercial property owned by the trust and also to assist with rehabilitation activities and leasing. After Kantor learned that Johnson signed a lease with a tenant who Kantor had procured, Focus Point sought the lease commission. Johnson canceled the listing agreement and refused to pay the commission and liquidated damages for early cancellation, which prompted Focus Point to file suit.
Two days before trial, Johnson tried to vacate the trial because she learned that Kantor had engaged in conduct in 2008 that would have been grounds for the Arizona Department of Real Estate (“ADRE”) to revoke his license. Specifically, while Kantor was operating under a provisional license and was prohibited from using alcohol and illegal drugs, Kantor was convicted of a DUI but did not disclose the conviction to the ADRE until 2011.
Because the commissioner is permitted under A.R.S. 32-2153(B) to revoke a license if the licensee has been convicted of a felony, Johnson argued that Kantor would not have held a license during the time of the listing agreement if he had timely disclosed his conviction, and was thus not a “qualified” licensed salesperson when he performed his services. The court disagreed, finding that Kantor was in fact licensed at the relevant time, and only the commissioner (not the Court) may decide whether a license should be revoked or whether a different or no sanction should be imposed. Kantor was awarded $140,000, which was the amount of liquidated damages provided for in the listing agreement, attorneys’ fees and costs.
Beyond the statutory interpretation, the result reached in Focus Point is consistent with the sanctity of contract and the basic equitable principle that a broker/salesperson who earns a commission should be paid for his services.