Legal Update 2020
Instructor: John Henderson JT@grar.com
Choice-of-Law Analysis Blocks Finder's Fee in Interstate Transaction
Eskenazi v. Slover, 2018 DNH 245, 2018 U.S. Dist. LEXIS 209463 (2019)
United States District Court for the District of New Hampshire
Facts: An unlicensed California resident contracted to act as a "facilitator" in the potential sale of a New Hampshire business to Texas resident. The agreement between the seller and buyer provided for a "finder's fee" to be paid to the facilitator. The agreement did not contain a choice-of-law provision. New Hampshire law prohibits the payment of a commission to an unlicensed person. California law contains an exception for a finder's fee. The buyer and seller then made their own deal and excluded the facilitator. The facilitator sued the buyer and seller in California. The case was removed to federal court in California and eventually transferred to federal court in New Hampshire. The buyer then moved to dismiss the case because the facilitator was not licensed in New Hampshire.
Issue: Which state's license law applied and was the facilitator entitle to the agreed fee?
Held: The court found that the New Hampshire law applied because it was the forum that had the most significant relationship to the transaction since the business was located there. New Hampshire licensing laws are broad and define "real estate" and any business opportunities related to the real estate. Since the facilitator did not have a New Hampshire license, then the finder's fee agreement was unenforceable.