Coleman Management, Inc v. David Meyer, James W. Rayner, Richard D. Baker, Rose McKee, and NCF Associates

This is an action to recover a real estate commission. The defendants are the general partners of a partnership that owned a single asset, an apartment complex. In 1992, the partnership filed a reorganization petition in bankruptcy. The partnership hired the plaintiff real estate agency to sell the apartment complex while it was in bankruptcy. After a hearing to establish the value of the property, the bankruptcy court permitted the partnership to buy back the property for $9.8 million. Soon after the bankruptcy plan was confirmed, however, the partnership, through the plaintiff real estate agency, contracted to sell the property to a third party for $12.5 million. Upon discovering this, the bankruptcy court permitted the sale to the third party to take place for $12.5 million, but it ordered that the excess proceeds of the sale be placed in escrow. When the escrow funds were released, the plaintiff real estate agency did not receive its commission on the sale of the property. Consequently, the real estate agency filed this lawsuit against the general partners to recover its commission. The defendants filed a motion to dismiss based on the statute of limitations and on the equitable doctrine of “unclean hands.” The trial court denied the motion and awarded the plaintiff real estate agency the commission sought plus prejudgment interest. The defendants now appeal. We affirm, finding that the lawsuit was timely filed, that the trial court did not err in declining to apply the unclean hands doctrine, and that the trial court did not abuse its discretion in awarding prejudgment interest.