Joan Evenson, et al., Respondents, vs. Brian Hanson, Defendant, Leech Lake Realty, Inc., Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-125

 

 

Joan Evenson, et al.,

Respondents,

 

vs.

 

Brian Hanson,

Defendant,

Leech Lake Realty, Inc.,

Appellant.

 

 

Filed October 7, 2003

Affirmed in part and reversed in part

Anderson, Judge

 

Cass County District Court

File No. C1-02-200

 

Gregory M. Erickson, Leondra M. Hanson, Eric J. Magnuson, Diane B. Bratvold, Rider Bennett, LLP, 333 South Seventh Street, Suite 2000, Minneapolis, MN  55402 (for appellant)

 

Steven M. Fuller, Janel C. Wallace, Fuller, Wallner, Cayko & Pederson, Ltd., 514 America Avenue Northwest, P.O. Box 880, Bemidji, MN  56619-0880 (for respondents)

 

            Considered and decided by Harten  , Presiding Judge; Anderson, Judge; and Wright, Judge.

 

U N P U B L I S H E D  O P I N I O N

 

G. BARRY ANDERSON, Judge

 

            Appellant challenges the district court's determinations that (1) respondents are entitled to payment of post-termination commissions under Minn. Stat. § 181.145, subd. 2 (2002); (2) the nonpayment of the commissions was willful and therefore the three-year statute of limitations in Minn. Stat. § 541.07(5) (2002) applies to respondents' claims; and (3) respondents are entitled to payment of the commissions under the theory of unjust enrichment and that unjust enrichment need not be specifically pled.  We affirm in part and reverse in part.  

FACTS

            Respondents Stacey and Joan Evenson began working as real-estate agents for appellant Leech Lake Realty in 1994 and 1995, respectively.  Their employment was terminated in March 1999.  In the months prior to their termination, respondents secured binding sales agreements for four properties.  Joan Evenson was the buyer's agent for the Veltum, Staak, and Koopman agreements.  The agent's commissions for these transactions totaled $4,779.60.  Stacey Evenson was involved as the listing agent in the Veltum and Foster transactions.  For these transactions, the agent's commissions totaled $6,174.00.  These transactions all closed after respondents had left appellant's employ.  At the time respondents' employment ended, appellant had an unwritten policy that no agent would receive post-termination commissions.

            Respondents brought an action seeking recovery of the unpaid commissions.  At the conclusion of the bench trial, the district court found that respondents were independent contractors working for appellant and that prior to leaving appellant's employ, respondents executed "fully completed purchase agreements" for the Veltum, Staack, Koopman, and Foster transactions.  The district court also found that the closings on these transactions took place after respondents' employment terminated and that appellant had willfully refused to pay respondents the agent's commissions for these transactions.  The district court concluded, as a matter of law, that Joan Evenson was entitled to judgment in the amount of $4,779.60 and that Stacey Evenson was entitled to judgment in the amount of $6,174.00.

            In its memorandum of law, the district court cited Minn. Stat. § 181.145, subd. 1 (2002), stating that respondents had earned the commissions as "due for services . . . which have actually been delivered to and accepted by the customer by the final day of the salesperson's employment."  The district court further noted that the commissions were earned when respondents obtained fully executed and enforceable purchase agreements on each of the involved properties.  The district court also reasoned that to allow appellant to retain the commissions would result in unjust enrichment, and that under Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn. App. 2001), unjust enrichment need not be pleaded with specificity.

            Appellant contends that respondents' claims are barred by the two-year statute of limitations in Minn. Stat. § 541.07(5).  This statute requires that actions for the recovery of wages, including commissions, shall be commenced within two years.   Id.  But, "if the nonpayment is willful and not the result of mistake or inadvertence, the limitation is three years."  Id.  The district court found that the nonpayment of the commissions sought was willful and, therefore, the three-year statute of limitations applied.  This appeal follows.

D E C I S I O N

 

            Appellant Leech Lake Realty first asserts that the district court erred by awarding respondents commissions for real-estate transactions that closed after respondents' employment terminated.  Joan Evenson testified that when she resigned, she had a conversation with Brian Hanson, owner of Leech Lake Realty, in which he gave her the indication that she would receive her commissions for transactions still "in the works."  Stacey Evenson testified that she "assumed" that she would receive commissions for transactions on which she worked that closed after she was let go.  The district court found it unnecessary to consider the existence of an oral agreement to pay commissions because respondents were entitled to the commissions by statute.

This court reviews issues of statutory construction de novo.  Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998).  In reviewing the district court's interpretation of Minn. Stat. § 181.145, subd. 2, our focus is on the interpretation of the word "earned" as used in the statute.  This court has stated that because the term "earned" is not defined by Minn. Stat. § 181.145, parties are free to define the term in their employment agreement, and that definition controls.  Holman v. CPT Corp., 457 N.W.2d 740, 743 (Minn. App. 1990), review denied (Minn. Sept. 20, 1990).  Here, however, there was no written agreement concerning when commissions were earnedonly an unwritten policy regarding nonpayment of post-termination commissions. 

Section 181.145, subdivision 2, states that the employer of a commission salesperson "shall promptly pay the salesperson . . . commissions earned through the last day of employment[.]"  Minn. Stat. § 181.145, subd. 2(a) (emphasis added).  "[C]ommissions earned through the last day of employment" is defined as "commissions due for services or merchandise which have actually been delivered to and accepted by the customer by the final day of the salesperson's employment."  Minn. Stat. § 181.145, subd. 1.  In the case of real-estate transactions, the "merchandise" delivered is the real estate itself, or, more accurately, ownership of the real estate, which is not actually delivered until closing.  The closings here did not occur pre-termination and thus, respondents were not entitled to payment under the statute.  Because we conclude that on these facts the commissions involved were not earned prior to the last day of respondents' employment, we reverse the district court's determination of this issue.  Respondents are not entitled, by law, to payment of the contested commissions.           

            Appellant next contends that the district court erred by applying the three-year statute of limitations in Minn. Stat. § 541.07(5), rather than the two-year statute of limitations in the same statute.  The construction of a statute is a question of law and is fully reviewable by an appellate court.  Hibbing Educ. Ass'n v. Pub. Employment Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985). 

Minn. Stat. § 541.07(5), states that actions for the recovery of wages (including commissions) shall be commenced within two years unless the nonpayment is willful, in which case the limitation is three years.  Id.  Willful nonpayment in this context means the intentional disregard of a known obligation to pay agreed-upon wages.  Levin v. C.O.M.B. Co., 441 N.W.2d 801, 805 (Minn. 1989).  Thus, in order for the three-year statute of limitations to apply, appellant must knowingly breach an existing obligation to pay respondents.  Because appellants had no statutory obligation to pay respondents the contested commissions, and based on appellant's unwritten policy regarding post-termination commissions, we conclude that there existed no known legal obligation for appellant to willingly disregard.  We conclude, based on the record before us, that the district court erred as a matter of law by applying the three-year statute of limitations in Minn. Stat. § 541.07(5).

            Finally, appellant argues that the district court erred by concluding that respondents were entitled to receipt of the commissions sought under the theory of unjust enrichment because respondents did not specifically plead this theory with specificity.  "Each averment of a pleading shall be simple, concise, and direct.  No technical forms of a pleading or motions are required."  Minn. R. Civ. P. 8.05.  Where parties have litigated issues of fact upon which the district court bases its [decision], the district court has the power to amend the pleadings, after trial, in accordance with the facts.  Maul v. Steele, 95 Minn. 292, 293, 104 N.W. 4, 4 (1905); see 1 David F. Herr & Roger S. Haydock, Civil Rules Annotated 408 (4th ed. 2002) ("When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.").

            This court has stated that when it is clear that a claimant is seeking equitable relief under an unjust-enrichment theory, it is not necessary that the pleading specifically use the words "unjust enrichment."  See Schumacher, 627 N.W.2d at 729 (stating that "[w]hile the complaint does not use the words ‘unjust enrichment,' it is clear that appellant was seeking equitable relief").  The Schumacher court concluded that by seeking the "reasonable value for his goods and services rendered [. . .]," the complainant was obviously seeking equitable relief under the unjust-enrichment theory.  Id.   Respondents used virtually identical language in their petition.  We conclude that the district court did not err by ordering an amendment to the pleadings to include a claim for equitable relief, i.e., unjust enrichment.

Although couched in terms of breach of contract, respondents sought in their complaint the "fair and reasonable value of the labor and skill performed . . . ," as well as "other and further relief as to the Court is just and equitable[.]"  See Schumacher, 627 N.W.2d at 729 (stating that where plaintiff sought "reasonable value for his goods and services rendered [. . . ,]" it was clear that plaintiff sought equitable relief).  But more importantly than the conclusory language of the pleadings, here all elements of an unjust enrichment claim were litigated.  Respondents contended that they did work that benefited appellant, and that they are owed their portion of the commissions for the transactions they helped secure.  There is evidence in the record, and the district court concluded, that respondents did all the "leg-work" necessary to complete the involved transactions and that it would be unjust for appellant to receive and retain respondents' portion of the overall commission as well as the company's (appellant's) portion.

While a different result certainly could have been reached here, our standard of review in analyzing the merits of respondent's unjust enrichment claim is whether the district court abused its discretion.  City of Cloquet v. Cloquet Sand and Gravel, Inc., 312 Minn. 277, 279, 251 N.W.2d 642, 644 (1977).  To establish a claim for unjust enrichment, "the claimant must show that another party knowingly received something of value to which he was not entitled, and that the circumstances are such that it would be unjust for that person to retain the benefit."  Schumacher, 627 N.W.2d at 29.

An action for unjust enrichment will lie where it has been established that one party was illegally or wrongfully enriched or in situations where it would be morally wrong for the party to retain the benefit gained at another's expense, and no adequate legal remedy is available.  First Nat'l Bank of St. Paul v. Ramier, 311 N.W.2d 502, 504 (Minn. 1981) (stating that "unjust" enrichment can mean illegal or unlawful enrichment); Schumacher, 627 N.W.2d at 729-30 (recognizing that unjust enrichment has been extended to situations where one's retention of benefit would be morally wrong); see Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn. App. 1992) (stating that relief under the theory of unjust enrichment is not available when there is an adequate remedy at law).

            Appellant asserts that any number of contingencies associated with each of the transactions might have prevented one or more of the closings at issue.  But appellant offers no evidence that any of these contingencies actually threatened in any material way to impede the real-estate closings at issue.  Thus, based on these facts, the work necessary to complete these transactions was completed, but for the closings, at the time the purchase agreements were secured.  Because we have already concluded that respondents were without a legal remedy in this case, based on the record before this court, we cannot conclude that the district court abused its discretion in determining that respondents were entitled to the commissions based on the theory of unjust enrichment.

            Because, as the district court concluded, respondents made a claim for equitable relief, the six-year statute of limitations in Minn. Stat. § 541.05, subd. 1(1) (2002) applies to respondents' unjust-enrichment claim.  See Block v. Litchy, 428 N.W.2d 850, 854 (Minn. App. 1988) ("The applicable time limit for bringing an action in unjust enrichment is six years.") (citing Minn. Stat. § 541.05, subd. 1(1)).  The statutes of limitations in Minn. Stat. § 541.07(5) only apply "to cases where the nature of the cause of action necessarily gives rise to a claim of lost wages."  Manteuffel v. City of N. St. Paul, 570 N.W.2d 807, 810 (Minn. App. 1997).  Because claims under the theory of unjust enrichment will not always include claims for lost wages or commissions, they are not governed by the limitation periods in section 541.07(5).  See id. (stating that because claims under "the data practices act will not always include lost wages, they are not governed by the two-year limitation period for wage claims in section 541.07(5)").  Respondents' claim of unjust enrichment is not a claim for commissions earned and payable under a contract or by law; therefore, under these facts, the statute of limitations for a claim of unjust enrichment in section 541.05 applies.

            Accordingly, we reverse the district court's determination that respondents are legally entitled to payment of the contested commissions under Minn. Stat. § 181.145, subd. 1, and because respondents are not so entitled, we conclude that it was erroneous for the district court to apply the three-year statute of limitations in Minn. Stat. § 541.07(5).  Based on the record before this court and mindful of our standard of review, we affirm the district court's determination that respondents are entitled to payment of the commissions for equitable reasons because appellant would otherwise be unjustly enriched.    

            Affirmed in part and reversed in part.