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Keywords

plaintiffprecedentappealverdicttrustleasecorporationnovationcondition precedent

plaintiffprecedentappealtrustwillleasecondition precedent

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Leo Eisenberg & Co., Inc. v. Payson, 162 Ariz. 529, 785 P.2d 49

Facts

In 1981, Leo Eisenberg & Co., Inc. entered into a commission agreement with Murphey Investment Trusts for locating a restaurant tenant, David B. Karmel. After Karmel faced financial difficulties, the Trust terminated the initial lease but later executed a second lease with Karmel's newly formed corporation, Karmel's on Broadway, Inc. The restaurant opened in December 1982, and Eisenberg sought the commission of $6,382.50, leading to a series of appeals and court decisions regarding the fulfillment of the commission agreement's conditions.

In 1981, Leo Eisenberg & Co., Inc. (Eisenberg), a broker, executed a letter agreement with Murphey Investment Trusts (the Trust) that provided for payment of a commission for having located a restaurant tenant, David B. Karmel (Karmel), for a shopping center owned by the Trust.

Issue

Whether the opening of the restaurant by Karmel's Inc. satisfied the condition precedent in the commission agreement that 'the tenant opens for business' and whether the doctrine of 'piercing the corporate veil' applied.

Rule

The court determined that the ambiguity of the commission agreement required a factual determination regarding the intent of the parties, and that the doctrine of 'piercing the corporate veil' does not apply when the plaintiff seeks recovery under a commission agreement.

Analysis

The court found that the jury was entitled to determine that the opening of the restaurant by Karmel's Inc. satisfied the condition that 'the tenant opens for business.' The court emphasized that the agreement was ambiguous and that the jury's verdict was supported by evidence showing that all parties were aware of the renovations needed and that the restaurant opened under the same terms as the original lease negotiated by Eisenberg.

The jury was instructed as follows: A condition precedent is a fact which must exist or occur before a duty of immediate performance or promise arises. In this case the commission payment to the plaintiff was subject to and contingent upon full execution by all parties of the lease, and that commission will be payable upon the date the tenant opened for business.

Conclusion

The Supreme Court vacated the Court of Appeals' decision, holding that the opening of the restaurant by Karmel's Inc. satisfied the condition precedent for commission payment, and remanded the case for further proceedings.

We hold that the court of appeals erroneously concluded as a matter of law that the opening of the restaurant by Karmel's Inc. did not satisfy the ambiguous condition precedent in the commission agreement that 'the tenant opens for business.'

Who won?

Eisenberg prevailed in the case because the Supreme Court found that the jury's determination regarding the fulfillment of the commission agreement's conditions was supported by evidence.

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