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Jameson Real Estate, LLC v. Ahmed

Court of Appeals of Illinois, First District, Fourth Division

September 28, 2018

JAMESON REAL ESTATE, LLC, and ART COLLAZO, Plaintiffs,
v.
AQUEEL AHMED and EURO COLLISION, INC., Defendants Jameson Real Estate, LLC, Plaintiff-Appellee,
v.
Aqueel Ahmed, Defendant-Appellant.

          Appeal from the Circuit Court of Cook County, No. 2014-L-10486; the Hon. Margaret Ann Brennan, Judge, presiding.

          Richard M. Craig, of Law Offices of Richard M. Craig, P.C., of Chicago, for appellant.

          Hal. R. Morris and Michael A. Jacobson, of Saul Ewing Arnstein & Lehr LLP, of Chicago, for appellee.

          Panel JUSTICE GORDON delivered the judgment of the court, with opinion. Presiding Justice McBride and Justice Burke concurred in the judgment and opinion.

          OPINION

          GORDON, JUSTICE.

         ¶ 1 In this appeal, defendant Aqueel Ahmed claims the trial court erred in entering judgment after a bench trial in favor of plaintiff Jameson Real Estate, LLC (Jameson), on plaintiff's quantum meruit claim that Ahmed failed to compensate Jameson for brokerage services it provided to Ahmed in the purchase of certain real property. For the following reasons, we affirm.

         ¶ 2 I. BACKGROUND

         ¶ 3 A. Complaint and Answer

         ¶ 4 Plaintiffs filed a complaint for real estate brokerage fees on October 8, 2014. After a motion to dismiss for failing to state a cause of action was granted, plaintiffs filed an amended complaint on April 21, 2015. The amended complaint contained five counts: (I) breach of agreement, (II) breach of verbal agreement, (III) unjust enrichment, (IV) quantum meruit, and (V) fraud. The only count at issue on this appeal is plaintiff's quantum meruit claim against defendant Ahmed.

         ¶ 5 In this count, plaintiff alleges that it is a real estate brokerage firm that employs plaintiff Art Collazo, who submitted an offer to purchase White Glove Car Wash (car wash) from Yoder, Inc., with an option to purchase the underlying real property from Terraco, Inc. (Terraco). After negotiating with Terraco for several months, Collazo was introduced to defendant Ahmed, owner of defendant Euro Collision, Inc. (Euro Collision), as a potential partner for purchasing both the business and real property. Before being introduced to Collazo, Ahmed was not aware that the business or real property was for sale. On October 31, 2012, Collazo and Ahmed signed a Confidentiality and Non-Disclosure Agreement (confidentiality agreement). After this agreement was executed, Collazo provided Ahmed with information about the business and property. Ahmed told Collazo he was interested in purchasing the business and property on behalf of his company, Euro Collision, Inc. In February 2013, Collazo told Ahmed that he would release his rights to the partnership established in the confidentiality agreement if Ahmed or his corporation, Euro Collision, paid plaintiff Jameson, Collazo's employer, a 5% commission as their broker when purchasing the business and property. Ahmed orally agreed. Ahmed purchased the real property and car wash on behalf of Euro Collision, [1] based on the information provided to Ahmed by Collazo and for which Jameson was not compensated. Plaintiff Jameson alleged that the reasonable value of its services to defendants was $115, 000.[2]

         ¶ 6 Defendants Euro Collision and Ahmed each filed an answer, denying all the allegations contained in count IV of plaintiffs' amended complaint.

         ¶ 7 B. Trial

         ¶ 8 The matter proceeded to trial on May 22, 2017. Plaintiff Collazo and defendant Ahmed each testified on their own behalf, and Robert Swanson, an employee of Terraco, testified on plaintiffs' behalf. Plaintiffs voluntarily dismissed defendant Euro Collision, Inc., from the suit prior to trial since the corporation never took title to the business or real property.

         ¶ 9 1. Art Collazo

         ¶ 10 Art Collazo testified that he has been a licensed real estate broker in Illinois for 23 years, was vice president of sales for Jameson, and is authorized to enter into contracts on the company's behalf. Collazo specializes in off-market commercial properties. Collazo explained that a property is off-market when it is not publicly listed. To broker the sale of off-market real estate, Collazo "pound[s] the pavement" to locate properties, finds purchasers for those properties, and then negotiates "sales price, terms, *** anything that get[s] the deal down the path and gets both sides talking and mutually agree." According to Collazo, he is known as "one of the top guys in the city to find off market property."

         ¶ 11 When Collazo represents a purchaser on an off-market property, it is usual and customary for the purchaser to pay his brokerage commission. An average brokerage commission is 10% for a business and 6% for real property. The rate of commission can vary based on how many people are involved, the fees, and the structure of the agreement. When Collazo is himself planning to be a partner in a transaction, his compensation depends on his role in the transaction and his capital contribution. This commission is paid at the closing of the transaction in either the disbursements of the closing proceeds or a separate payment. The commission is paid to Jameson, not to Collazo in his individual capacity.

         ¶ 12 While it is typical for Collazo to have a written agreement regarding the brokerage commission, he does some work without a written agreement and performs brokerage services before the agreement is signed in many instances. When he presents an opportunity to a client, he asks them to sign a confidentiality agreement before he provides them information about the property.

         ¶ 13 Collazo testified that, in addition to his work as a broker with Jameson, he purchases businesses and real property in an individual capacity. Collazo purchases a business only if he can own or control the real property component and the real property component is valuable even if the business fails, so he has an "exit plan." He has owned several businesses, including a development company, a contracting company to build for his development company, and two food establishments. He has developed over 60 buildings in Chicago, and his development company has also developed buildings for other developers. He does not currently own any businesses.

         ¶ 14 Collazo was a customer of the car wash for over 10 years and knew Harold Yoder, the owner of the car wash. Collazo repeatedly expressed to Yoder his desire to purchase the car wash. Collazo believed purchasing the car wash would diversify his real estate portfolio and provide a steady stream of income. In 2011 or 2012, Collazo initiated talks with Yoder about the sale of the car wash. At Collazo's request, Yoder provided him with the financial information about the property. Collazo learned that the real property on which the car wash business was located was owned by Terraco, a development company. Collazo informed Scott Gendell, the president of Terraco, of his interest in purchasing the property. Collazo negotiated directly with Robert Swanson, Terraco's chief financial officer, while his attorneys modified the terms of the purchase option agreement that was never executed.

         ¶ 15 The draft of the proposed purchase agreement for the property admitted into evidence is dated April 1, 2012, and identifies the seller as White Glove Center, Limited Partnership, an entity controlled by Terraco, and the purchaser as WGC, LLC (WGC), an LLC that Collazo's attorney was then in the process of forming. The asking price was $2.65 million on the real estate. Collazo did not execute the purchase option with Terraco, because he had not completed his negotiations with Yoder for the purchase of the business itself. Collazo was "having a very difficult time deciphering" the profits and losses of the car wash and placed the negotiations with Terraco "on hold" until he could better understand the car wash business.

         ¶ 16 In the fall of 2012, Collazo asked Matt Katsaros, one of Jameson's "top commercial brokers," if Katsaros could recommend an individual who understood the car wash business. Katsaros recommended defendant Ahmed as an individual with "a lot of money," who had previously owned and sold car washes. Ahmed had previously employed Jameson as his broker in the purchases of two listed properties under a written agreement, and the commissions for those purchases were paid from the seller's proceeds. Collazo decided to contact Ahmed about either partnering with Collazo to purchase the property or having Ahmed employ Collazo as a broker in purchasing the property. Katsaros contacted Ahmed to determine if he was interested. Ahmed agreed to meet Collazo, but before sharing information about the property, Collazo required Ahmed to sign a confidentiality agreement. Katsaros e-mailed this agreement to Ahmed. It was standard practice for Collazo to ask potential purchasers in off-market transactions to sign these agreements, which prevented the other party from "go[ing] behind" Collazo to purchase the property without compensating him and allowed Collazo to recover the information if the other party lost interest in the property, so he could quickly distribute it to another potential purchaser.

         ¶ 17 The "Confidentially and Non-Disclosure Agreement" was admitted into evidence and was signed by Collazo and Ahmed. The three parties to the agreement were Ahmed, Collazo, and WGC. The first page of the confidentiality agreement established that the parties were "exploring the possible transaction" and that the recipient was required to agree to the confidentiality requirements as "conditions precedent to receiving information concerning the company." He described the second paragraph as an "acknowledgment" of the work Collazo had already performed to acquire the information and initiate negotiations with the seller. The paragraph titled "Indemnification" states that the recipient is "not supposed to use the information to further [himself] on this or enrich [himself] on this transaction" and establishes certain liability expenses and penalties for doing so. The seventh section establishes that if the recipient is "not going to move forward" with the deal, then he or she must return the information to Collazo.

         ¶ 18 The "Indemnification" paragraph of the agreement states that

"[t]he recipient will hold harmless the Company and its managers, members, assigns, agents, and affiliates (collectively the 'indemnitee') from any liabilities and expenses including but not limited to attorneys' and accountants' fees, investigation costs, travel costs, transcript costs, disbursements, settlement amounts, judgment, fines or penalties, which any Indemnitees incur in connection with any claims, actions, suits, or proceedings, (whether civil, criminal, administrative, or investigative, including all associated appeals) in which it is determined by a court of competent jurisdiction that Recipient breach its confidentiality and obligations set forth in this Agreement."

         ¶ 19 The seventh paragraph, titled "Return of Data-No Use," states that "[i]f the Recipient does not enter into any transaction with the Company, upon request of the Company, the Recipient immediately will return to the company, or in the event that any materials contain the Recipient's analysis of the Confidential Information the Company may elect to destroy all the Confidential Information and all notes, data, plans, reference material, software, memoranda, programs, documents, records, copies of any of the foregoing and all other information which in any way relates to the Confidential Information. The Recipient will not retain any copies or abstracts of the foregoing items in any media and acknowledges that this Agreement does not grant the Recipient any use of or other rights in the Confidential Information, the Recipient's sole right being to review the Confidential Information for consideration of entering into a transaction with the Company."

         ¶ 20 Ahmed signed the confidentiality agreement on October 31, 2012. After Katsaros returned the signed agreement to Collazo by e-mail, Collazo shared with Ahmed the financial documents he had obtained from Yoder, including the profits and losses of the business and the terms of its lease with Terraco. Ahmed and Collazo met to determine the right price to offer for the business and the real property. Together, they were able to negotiate a lower price for the business, but there is no evidence what that price was. Collazo negotiated down the price of the real property from $2.65 million to $2.3 million. During these negotiations, Collazo and Ahmed did not discuss whether they would be partners in the purchase or if Collazo would be paid a broker's commission. Nothing in the confidentiality agreement discussed the payment of any broker's commission.

         ¶ 21 On January 8, 2013, Collazo exchanged e-mails with Robert Swanson, the chief financial officer of Terraco. The e-mails were admitted into evidence. Collazo shared with Swanson an e-mail in which Ahmed stated he was interested in purchasing the car wash business. Swanson responded by e-mailing the terms of the lease, including its "monthly minimum rent" of $18, 994, and that he was willing to meet with Ahmed if Ahmed agreed to the terms of the lease. Collazo and Ahmed then met with Swanson and other representatives of Terraco at Terraco's offices. On January 16, 2013, Ahmed sent Collazo an e-mail that was admitted into evidence and included Ahmed's potential business plan to share with Terraco. Collazo sent Ahmed's business plan without modification to Swanson on January 17, 2013, by e-mail, which was also admitted into evidence. After Terraco received this plan, negotiations continued. Collazo desired to make Terraco comfortable with potential partners and was still "trying to get to some final number."

         ¶ 22 In January 2013, personal matters began affecting Collazo's involvement in the negotiations. He decided that the car wash was "not such a great deal," and that, instead of being a partner in the purchase, he would pursue a broker's commission and move on. Collazo told Ahmed that he did not want to pursue a partnership with Ahmed to purchase the property and instead would accept a brokerage fee. After this conversation, Collazo still continued to assist with the transaction. In late January 2013, communication briefly ceased between Collazo and Ahmed, as Ahmed dealt with a personal matter. On February 1, 2012, Collazo texted Ahmed to ask if he was still interested in purchasing the property, Ahmed confirmed that he was still interested, and they continued to communicate about the property. Collazo and Ahmed's communications via text message from December 12, 2012, to March 5, 2013, were admitted into evidence. On February 5, 2013, Collazo and Ahmed met with Yoder and Swanson at the car wash.

         ¶ 23 On the following day, February 6, 2013, Collazo met with Ahmed and handed him a hard copy of a brokerage services agreement admitted into evidence. It listed the parties as Jameson and Ahmed and stated that Ahmed would pay Jameson a 5% brokerage commission on the price of the business and the real property involved in the transaction at the time of closing. A 5% commission on $2.3 million purchase price Collazo negotiated for the property would be over $100, 000.[3] Following the meeting, Collazo e-mailed a copy of the agreement to Ahmed. He signed this e-mail, "Art Collazo, Vice President of Jameson Subsidies International Realty." In a text message, Collazo asked Ahmed to sign and fax him a copy of the agreement. That evening, Ahmed sent Collazo a text back stating: "I will take care of it first thing in the morning. No worries." Collazo texted Ahmed, "Thank you." Ahmed responded, "No problem!" This was the last text message Collazo received about the brokerage agreement. Collazo understood the exchange to mean that Ahmed accepted the terms of the brokerage agreement. In Collazo's experience, if "somebody doesn't discuss or send me something, it's understood [they are] fine with it unless [they are] going to negotiate it." While typically, Collazo would not act as a broker for a client without a signed brokerage agreement, he decided to continue to act as a broker without a signed agreement in this transaction because he had already performed the work of "negotiating and bringing [Ahmed] into the deal" and was entitled under the confidentiality agreement to find a new client to purchase the property if Ahmed decided not to purchase the property. At a later meeting, Ahmed offered to pay a fee to Collazo individually as an alternative form of compensation to signing the brokerage agreement with Jameson. Collazo refused the offer.

         ¶ 24 After February 6, 2013, Collazo continued to be involved in "communicating, negotiating, [and] helping" Ahmed with the transaction. At no point in February 2013 did Ahmed ask Collazo to stop working on his behalf. Collazo remained in communication with Ahmed, Yoder, and Swanson. On February 13, 2013, Collazo texted Ahmed to discuss his negotiations with Yoder. On February 27, 2013, Collazo received an e-mail from Ahmed, which included the draft of a letter Ahmed was writing to Swanson to negotiate a lower price for the property. Collazo responded with revisions he made to Ahmed's letter to make it more likely to persuade Terraco to lower its price. This exchange was admitted into evidence. A short time later, Collazo met with Ahmed, who informed him that he no longer planned to purchase the property. After this meeting, Collazo attempted to contact Ahmed several times, and Ahmed did not respond. Collazo gave Ahmed a two-week opportunity to revisit the deal, then Collazo attempted to contact Terraco on behalf of another potential purchaser for the property. After a delay Collazo thought uncharacteristic of his prior dealings with Terraco, a Terraco representative informed Collazo by e-mail that the potential purchaser should contact Terraco directly. When the potential purchaser did so, Terraco responded that the property was already under contract. Neither of these e-mails were admitted into evidence.

         ¶ 25 Collazo testified that he first learned the property was under contract in a conversation with employees at the car wash in the spring of 2013. In August 2013, he received an e-mail from Terraco, not admitted into evidence, confirming that the property was under a contract of sale to Ahmed. Since Ahmed's purchase of the property, Collazo has observed significant renovations to the car wash, including the addition of a second floor to the ...


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