Banowsky v. Schultz

Dallas Court of Appeals, No. 05-14-01624-CV (February 10, 2016)

Justices Fillmore, Myers (Opinion), and Whitehill

Banowsky contracted with Schultz, the majority owner of the Studio Movie Grill chain, to find sites for new SMG theaters. Banowsky was to be paid a $100,000 “advisory fee” for each location proposed by Banowsky that SMG thereafter leased or purchased. In 2008, Banowsky identified a property in Arizona. SMG declined to pursue that option and soon thereafter terminated the agreement with Banowsky. The next year, however, Schultz revisited the Arizona site, negotiated a lease, and opened a new SMG theater there. Because Banowsky’s agreement with Schultz provided that he was to be paid even after termination if SMG accepted a location he had brought to SMG during the life of the contract, Banowsky sued for his $100,000 fee on the Arizona location.

Schultz defended primarily on the basis of the Texas Real Estate License Act, which Schultz argued prohibits anyone but a licensed real estate broker from collecting compensation in connection with a real estate transaction. Banowsky was not a licensed broker. But he was and is a licensed attorney. And RELA’s prohibition, Occupations Code § 1101.806(b), allowed compensation to be collected either by “(1) a license holder at the time the act was commenced; or (2) an attorney licensed in any state.” The then-applicable version of § 1101.005(1) went further, providing that RELA “does not apply to: (1) an attorney licensed in any state.” (As amended, that exemption—as well as a related exemption in Tex. Admin. Code § 535.31—now extends only to “an attorney licensed in this state,” rather than “any state.”) Relying on a 1973 decision of the Dallas Court of Appeals, Sherman v. Burton, Schultz argued the attorney exemption did not apply because he had no attorney-client relationship with Banowsky and Banowsky performed no legal services. The Dallas Court rejected that argument, explaining that its Sherman decision was based on a prior version of the statute that exempted “services rendered by an attorney.” When the legislature amended the statute to extend the exemption to attorneys, period, rather than to “services rendered by an attorney,” it removed any requirement that the exemption apply only in attorney-client relationships or to the rendition of legal services. Instead, despite some compelling policy considerations to the contrary, “[t]he language used indicates the legislature intended nothing less than a ‘total, absolute exemption for the persons listed,’” including attorneys like Banowsky.