## Facts

- Business Consulting Services, Inc., doing business as Hawkeye Business Brokers, provided brokerage services for the sale of businesses.
- Leroy Wicks owned Homeguard Security and sought to sell the business.
- On January 24, 2002, Wicks and Hawkeye (through broker Joy Jones) signed a nonexclusive listing agreement running to March 24, 2002.
- The agreement provided a 10% commission if Hawkeye produced a ready, willing, and able buyer during the listing period.
- The agreement included a one-year extension clause requiring Wicks to pay a commission if, within one year after termination, the business was sold to anyone (a) referred to Wicks by Hawkeye or (b) with whom Wicks had negotiations during the listing term.
- David Gutfreund, formerly associated with a company that worked closely with Homeguard, had independent familiarity with the business and contacts related to it.
- During the listing period, Gutfreund communicated with Hawkeye about interest in purchasing a business like Homeguard, but he believed he could not pursue Homeguard at that time due to conflict-of-interest concerns.
- After the listing expired, Wicks sold Homeguard to Gutfreund within the one-year extension period.
- Hawkeye demanded a commission under the extension clause; Wicks refused.
- The district court entered judgment for Hawkeye enforcing the extension clause; Wicks appealed.

## Issues

1. Whether the extension clause entitled the broker to a commission when the sale occurred within one year after expiration, but the buyer was not shown to be referred by the broker or involved in qualifying negotiations with the seller during the listing term.
2. How to interpret the extension clause phrases “referred to Seller by the Broker” and “negotiations during the term of this Agreement.”
3. Whether substantial evidence supported the district court’s finding that the extension clause conditions were met.

## Decision

- The Supreme Court of Iowa reversed the judgment for Hawkeye and remanded.
- The court held the extension clause was not triggered because the evidence did not show a qualifying referral by Hawkeye or negotiations between Wicks and Gutfreund during the listing term as required by the contract.
- Applying the substantial-evidence standard, the court found the record inadequate to support the commission award.

## Legal Principles

- Extension clauses protect brokers against a seller’s attempt to avoid paying a commission by delaying a sale to a buyer connected to the broker until after the listing expires, but the clause is enforced according to its terms.
- A buyer is not “referred” to the seller within the meaning of an extension clause absent sufficient evidence that the broker meaningfully connected the buyer to the seller in the manner contemplated by the agreement.
- “Negotiations” in an extension clause requires more than casual, preliminary, or tangential contact; it requires substantive dealing about a potential sale during the listing term.
- Substantial evidence means evidence a reasonable factfinder would accept as adequate to reach the conclusion; without it, a commission award based on an extension clause cannot stand.

## Conclusion

The court required the broker to prove the extension clause’s specific triggering conditions—referral or substantive negotiations during the listing term—and reversed the commission award because the record did not substantially support either condition.


Bus. Consulting Servs., Inc. v. Wicks, 703 N.W.2d 427 (Iowa 2005)