Agent Real Estate Services, LLC, et al., Appellant, vs. Maciek G. Kaminski, a/k/a M.G. Kaminski, et al., Respondents.

Agent Real Estate Services, LLC, et al.,

Appellant,

vs.

Maciek G. Kaminski, a/k/a M.G. Kaminski, et al.,

Respondents.

Filed October 16, 2007

Affirmed

Harten, Judge*

Hennepin County District Court

File No. 27-CV-06-8505

William R. Skolnick, Rolin L. Cargill, III, Skolnick & Associates, P.A., 527 Marquette Avenue South, Suite 2100, Minneapolis, MN 55402 (for appellants)

Gregory T. Spalj, Kristine K. Kroenke, Fabyanske, Westra, Hart & Thomson P.A., 800 LaSalle Avenue, Suite 1900, Minneapolis, MN 55402 (for respondents)

            Considered and decided by Dietzen, Presiding Judge; Halbrooks, Judge; and Harten, Judge.

HARTEN, Judge

            Appellants, real estate brokers, challenge the district court's dismissal under Minn. R. Civ. P. 12.02(e) of their action for a commission.  Because Minn. Stat. § 82.18 (2004) applies to this action and provides that a broker may not bring an action for a commission without a written agreement and appellants had no written agreement, we affirm the dismissal.

FACTS[1]

            In August 2004, respondents Maciek Kaminski and Wayzata Properties, LLC, wanted to purchase some commercial real estate.  They agreed to hire appellants Argent Real Estate Services, LLC, and Meridian Real Estate Group, LLC, to be their real estate brokers and to pay them 1.5% of the purchase price of any property purchased.  In October 2004, appellants presented Kaminski with a contract setting forth terms of this agreement.  Kaminski declined to sign it.  Appellants nonetheless acted under the arrangement and eventually presented property that respondents purchased for $112,687,500.  But respondents failed to pay appellants their 1.5% commission.

            In April 2006, appellants brought this action to recover damages of 1.5% of the purchase property, which respondents had refused to pay.   Respondents moved to dismiss appellants' action under Minn. R. Civ. P. 12.02(e), arguing that appellants were prohibited by statute from bringing it. The district court granted the motion to dismiss, and appellants now challenge the dismissal. 

D E C I S I O N

            The only question before a court reviewing a dismissal for failure to state a claim on which relief can be granted under Minn. R. Civ. P. 12.02(e) is whether the complaint set forth a legally sufficient claim for relief.  Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997).  Whether appellants' complaint set forth a legally sufficient claim for relief is based on the construction of Minn. Stat. § 82.18, subd. 2 (2004).  Statutory construction is a question of law, which this court reviews de novo.  Brookfield Trade Ctr., Inc., v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998).  The statute provides:

No person required by this chapter to be licensed [as a real estate broker] shall be entitled to or may bring or maintain any action in the courts for any commission, fee or other compensation with respect to the purchase, sale, lease, or other disposition or conveyance of real property . . . unless there is a written agreement with the person required to be licensed.

Minn. Stat. § 82.18, subd. 2.  A written agreement must be signed by the party against whom it is being enforced.  See Wells Const. Co. v. Goder Incinerator Co., 217 N.W. 112, 113 (Minn. 1927) (holding that a document written and signed by one party and sent to the other is not enforceable against the other).  It is undisputed that Kaminski never signed the written agreement appellants presented to him.  Therefore, Minn. Stat. § 82.18, subd. 2, precludes appellants from bringing an action to recover their commission.            

            Appellants argue that they substantially complied with Minn. Stat. § 82.18 because three separate documents collectively meet the "written agreement" requirement.[2]  In addition to the unsigned commission agreement, these documents are the seller's transaction roster, which identifies appellants as respondents' brokers, and the purchase agreement, which was signed by respondents and which identifies one or both appellants as the buyers' brokers.  But neither of these documents appears in the record.  Accordingly, we do not consider them because appellate courts may not consider matters outside the appellate record.  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).  Appellants' "substantial compliance" argument fails.

      Appellants also argue that their full performance under the commission agreement satisfied the statute of frauds element of Minn. Stat. § 82.18.  For this argument, they rely on Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320, 325-26 (Minn. 2004) ("extensive performance by both parties satisfied any statute of frauds aspect of [the relevant statute]").  But here, appellants were the only party that performed.  When only one party performs and seeks to use that performance to avoid a statute of frauds requirement, that party must bring its action in equity.   See Hallock v. Anderson, 221 Minn. 30, 32, 20 N.W.2d 884, 885 (1945) ("The doctrine of part performance is purely an equitable doctrine, unrecognized at law, and accordingly will not sustain an action at law for damages based on a contract within the statute of frauds" (emphasis added), quoted in In re Petroleum Carriers Co., 121 F. Supp. 520, 524 (D. Minn. 1954)); Hecht v. Anthony, 204 Minn. 432, 435, 283 N.W. 753, 754 (1939) ("Equity may specifically enforce an oral contract void under the statute of frauds where there has been full performance by the party seeking the relief and it would work a fraud to deny the same" (emphasis added)); Krogness v. Best Buy, Inc., 524 N.W.2d 282, 287 (Minn. App. 1994) ("The written agreement requirement . . . would be defeated if a broker could recover compensation under an unjust enrichment or quasi-contract theory."), review denied (Minn. 25 Jan. 1995). Krogness also explicitly rejects allowing brokers to defeat the "written agreement" requirement by bringing an action for a commission under theories of implied-in-fact contract, quasi-contract, or unjust enrichment.  Id. at 286-87.

      The Restatement (Second) of Contracts § 139 cmt c illus. 3 (1979), considers a statutory "written agreement" requirement in the context of the sale of a business opportunity:

A orally promises to pay B a commission for services in negotiating the sale of a business opportunity, and B finds a purchaser to whom A sells the business opportunity.  A statute extends the Statute of Frauds to such promises, and is interpreted to preclude recovery of the reasonable value of such services.  The promise is not made enforceable by B's reliance on it.

If appellants had brought their action in equity rather than for contractual damages, they might have been able to defeat a motion to dismiss under Minn. R. Civ. P. 12.02.  But they did not bring an action in equity.

Finally, in their reply brief and at oral argument, appellants argued that the district court erred in denying their motion to amend their complaint to add an equitable claim.  But appellants never moved in writing to amend their complaint.  Near the end of the hearing on respondents' motion to dismiss, appellants' attorney stated:

[I]f the Court were so inclined to do an injustice and allow the fraud to be perpetrated by denying [appellants] compensation that they earned, then we would ask to seek leave to amend a certain equitable claim.  But we really didn't assert an equitable claim because we saw this as a straightforward contract case where there had been full performance. 

In their brief, appellants did not challenge the denial of the motion to amend; rather they asserted that their complaint was "not deficient because it seeks money damages instead of equitable relief[,]" and the only relief they sought on appeal was reversal of the dismissal and reinstatement of the complaint.  The motion to amend was not properly presented to the district court, and the denial of that motion was not before this court.  We have no basis for reversing the denial of appellants' motion to amend.  See Thiele, 425 N.W.2d at 582 (this court does not generally address matters not presented to and considered by the district court).

Minn. Stat § 82.18, subd. 2, unequivocally precludes real estate brokers who do not have written agreements from bringing an action for a commission.  Appellants in effect invite this court to repeal an applicable statute.  But a change in a statute must come from the legislature.  Martinco v. Hastings, 265 Minn. 490, 497, 122 N.W.2d 631, 638 (1963).  We conclude that the district court did not err in dismissing appellants' action.

            Affirmed.     

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] Facts are taken from appellants' complaint, which is assumed to be true for purposes of this appeal.  See Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003) (court reviewing dismissal under Minn. R. Civ. P. 12.02(3) "must consider only the facts alleged in the complaint, accepting those facts as true").

[2] This argument does not appear to have been made to the district court either in writing or orally, so it is not properly before us.  See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).  But we address it in the interest of completeness.  See Minn. R. Civ. App. P. 103.04 (appellate court may review any matter as they interest of justice may require).