Tort/Negligence – Tortious Interference with Contract – Justification – Real Property – Sales Commissions

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Broach v. Carter (Lawyers Weekly No. 011-122-12, 9 pp.) (H. Bruce Williams, J.) Appealed from Horry County Circuit Court. (Steven H. John, J.) S.C. App. Full-text opinion.

Holding: Although the plaintiff-real estate agents showed that defendant Jacobson knew he was causing the defendant-real estate agency to breach its contract with plaintiffs by subordinating their commissions to the development’s construction loan, Jacobson was justified in doing so. Without a renegotiated construction loan, neither plaintiffs nor anyone else involved in the project would have gotten paid.

We reverse the jury’s award of (1) damages to plaintiffs against Jacobson for tortious interference with contract and (2) punitive damages.

In order to save a struggling real estate development, defendant Jacobson renegotiated the construction loan. The bank insisted that real estate commissions be subordinated to the loan. On behalf of the developer, Jacobson agreed, despite his knowledge that plaintiffs’ contracts with the real estate agency required that their commissions be paid at closing. The real estate agency entered into a new agreement with the developer, subordinating its commissions to the construction loan.

The project failed, and plaintiffs’ commissions were not paid.

Jacobson testified the sole purpose of the renegotiated contracts was to save the project so that everyone, including plaintiffs, could get paid. There is no evidence to refute that Jacobson acted in good faith. Jacobson was justified in entering into the renegotiated contract, which subordinated plaintiffs’ commissions.

Based on our reversal of the jury’s finding that Jacobson tortiously interfered with plaintiffs’ contracts, we must also reverse the jury’s award of punitive damages to plaintiffs.