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Evenson v. Leech Lake Realty, Inc.: Salespeople Awarded Post-Termination Compensation

A Minnesota appellate court considered whether two salespeople could recover compensation from transactions which were under contract when they terminated their relationship with brokerage but closed post-termination.

Stacey and Joan Evenson (“Salespeople”) were real estate agents for Leech Lake Realty (“Brokerage”). In March 1999, the relationship between the Salespeople and the Brokerage came to an end. The Salespeople both had a number of transactions under contract at the time their relationship terminated and these transactions did not close until post-termination. The total amount of commissions that the Salespeople would receive from these transactions was approximately $10,000. The Brokerage had an unwritten policy that it did not pay post-termination commissions.

The Brokerage refused to pay the Salespeople the amount of the post-termination commissions, and the Salespeople filed a lawsuit seeking payment of the commissions. The trial court awarded the Salespeople the full amount of the unpaid commissions, and the Brokerage appealed.

The Court of Appeals of Minnesota affirmed the award of the commission amounts to the Salespeople, although not on the same grounds relied upon by the trial court. The court first considered whether the Salespeople had a statutory right to receive the commissions. Under Minnesota’s wage payment laws for salespeople, a salesperson is entitled to receive at the time of termination all commissions “due for services…which have actually been delivered to and accepted by the customer by the final day of the salesperson’s employment.” The trial court had determined that this statute applied once the properties went under contract, and so had awarded the Salespeople their commissions on the basis of this statute. The court rejected this argument, finding that commissions were not owed until the transactions closed, which had not happened at the time of termination. Thus, the court ruled that the Salespeople did not have a statutory right to the commissions.

Next, the court considered whether the Salespeople could collect the commissions under an unjust enrichment theory. The trial court had ruled that the Salespeople were also entitled to receive the entire commission amount under this theory as well. The Brokerage argued that the Salespeople were not entitled to recover a commission under this theory because the Salespeople had not adequately pleaded unjust enrichment in their complaint.

In order to allege unjust enrichment, a party needs to allege that he/she conferred a benefit upon the other party for which he/she deserves compensation. While the complaint of the Salespeople failed to use the term “unjust enrichment”, the court found that the essence of their allegations amounted to an unjust enrichment claim, as they were arguing that they had done all of the work to bring these transactions under contract and so they deserved to receive compensation for their services. The court found that the evidence supported the trial court’s awarding of the commission amounts on this basis, and so affirmed the trial court’s award of the commission amounts to the Salespeople. So, while the court determined that the Salespeople did not have a statutory right to recover the commissions, the court affirmed the trial court’s award of the commission amounts on an unjust enrichment theory.

Evenson v. Leech Lake Realty, Inc., No. A03-125, 2003 WL 22293649 (Minn. Ct. App. Oct. 7, 2003). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion].