## Facts

- Thomas K. Sieg signed a 12-month exclusive listing agreement to sell Salt Lake City real property; the agreement was later assigned to Premier Van Schaack Realty, Inc.
- The commission clause required a 7% fee if, during the listing period, any party was produced who was “ready, willing and able” to “buy, sell or exchange” (defined collectively as “acquire”) the property at the listing price or other agreed terms, calculated on the “acquisition price.”
- Premier introduced Sieg to three prospective purchasers who agreed to buy the property for $1.3 million, but the transaction did not close and earnest money was returned.
- The same individuals later formed an LLC with Sieg (MJTM, LLC) under an operating agreement.
- Sieg contributed the property to the LLC and received a 40% membership interest and a 9% preferential return on future profits; the agreement credited him with a $670,000 capital account and provided that the LLC would assume $580,000 of his debt.
- The operating agreement included protections for Sieg, including limits on other members’ ability to encumber the property without his consent.
- After the transfer, the LLC obtained a secured loan; the members personally guaranteed it, and part of the proceeds retired prior debt associated with the property.
- Premier demanded a commission, asserting the conveyance to the LLC was a “sale or exchange” at the $1.3 million valuation; Sieg refused, characterizing the transfer as a capital contribution rather than a disposition to an acquiring buyer.
- The trial court granted summary judgment to Sieg and awarded him attorney’s fees under the agreement; Premier appealed.

## Issues

1. Whether Sieg’s conveyance of the property to a newly formed LLC in return for a 40% membership interest and related rights constituted a “sale or exchange” (an “acquisition”) under the listing agreement, triggering Premier’s 7% commission.
2. Whether Sieg, as prevailing party, was entitled to attorney’s fees under the agreement, including fees incurred on appeal.

## Decision

- The Utah Court of Appeals affirmed summary judgment for Sieg.
- The court held the LLC conveyance was not a “sale or exchange” within the meaning of the listing agreement and therefore did not trigger a brokerage commission.
- The court affirmed Sieg’s entitlement to attorney’s fees under the agreement and remanded for determination of reasonable attorney’s fees incurred on appeal.

## Legal Principles

- Contract terms in a listing agreement are interpreted according to ordinary contract principles and the ordinary meaning of the operative transaction terms.
- A “sale” generally requires a transfer of property for a price in money or its equivalent; an “exchange” generally involves a reciprocal transfer in which the transferor gives up proprietary rights in the property.
- A transfer of real property to an entity in which the transferor retains a substantial continuing ownership interest and meaningful control can be treated as a capital contribution/investment rather than a commission-triggering sale or exchange.
- A listing commission provision tied to an “acquisition price” is not satisfied by internal valuation and capital-account arrangements where no arm’s-length purchase price is paid by an independent acquiring party.
- Where a listing agreement provides that the prevailing party in disputes arising out of the agreement is entitled to reasonable attorney’s fees and costs, the prevailing party may recover fees at trial and reasonable fees on appeal.

## Conclusion

The court held that contributing property to a newly formed LLC in return for an ownership interest and protective control rights was not a “sale or exchange” under the listing agreement’s commission clause, and it enforced the agreement’s prevailing-party fee provision in favor of the property owner, including appellate fees.


Premier Van Schaack Realty, Inc. v. Sieg, 2002 UT App 173, 51 P.3d 24 (Utah Ct. App. 2002)