Summary
affirming district court's dismissal for failure to state a claim on which relief could be granted of Tammy Lawhead's claims of breach of contract, tortious interference with contract, and misrepresentation and the district court's determination that she had alleged no basis for overturning the arbitrators' award
Summary of this case from Lawhead v. NixaOpinion
No. C7-00-1425.
Filed February 6, 2001
Appeal from the District Court, Mower County, File No. C600647.
Brandon V. Lawhead, Donaldson V. Lawhead, (for appellants)
Gary E. Leonard, (for respondents)
Considered and decided by Peterson, Presiding Judge, Lansing, Judge, and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellants Tammara D. Lawhead and her business, Tammy Lawhead Homes, Inc., challenge the district court's dismissal of three counts of their complaint for failure to state a claim upon which relief can be granted and denial of their request to vacate an arbitration award. Appellants argue that they were not given a full and fair opportunity to be heard in arbitration and that arbitration cannot collaterally estop their contract and tort causes of action. We agree with the district court that appellants' case was fully decided in binding arbitration and that appellants have not alleged facts sufficient to support vacating the award of the arbitrators and, therefore, affirm.
FACTS
Because this is an appeal from dismissal of claims for failure to state a cause of action, we assume facts as presented by appellants Tammara D. Lawhead and Tammy Lawhead Homes, Inc. (Lawhead). Lawhead and respondent Nancy L. Ulwelling are both real estate brokers and members of the Austin Multiple Listing Service (MLS). Ulwelling was the broker for sellers of a house in Austin and Lawhead was the broker for buyers. The listed price of the house was $65,000 and Ulwelling offered a three-percent commission on the sale to any MLS-member who procured a buyer.
In May 1999, Lawhead gave Ulwelling a purchase agreement signed by buyers offering $60,000 for the house, subject to FHA financing. The purchase agreement listed Lawhead as the procuring agent. Ulwelling told Lawhead that because sellers were in default on their mortgage to Norwest Bank, Norwest might discount the mortgage and accept the buyers' offer. A short while later, Ulwelling told Lawhead that Norwest had orally approved the discount. Lawhead and Ulwelling set a closing date for June 24, 1999.
Lawhead asked Ulwelling to have sellers sign the purchase agreement and to provide a copy of the signed agreement to Sterling State Bank, where buyers had filed preliminary financing applications. While helping the buyers complete their financing application with Sterling State Bank, Lawhead learned that buyers were contesting debts and collections that appeared on their credit record. The buyers failed to resolve their credit issues and obtain financing by June 24, 1999, and the closing did not occur. Ulwelling never provided Sterling State Bank with a signed purchase agreement showing Lawhead as the procuring agent. Sterling State Bank asked Ulwelling if she could finance the buyers' purchase until their credit issues were resolved.
After the closing date had passed, Ulwelling told Lawhead that she and a business partner were thinking about buying the property and renting it to buyers until buyers could obtain financing and, in that case, Lawhead would receive no commission. Ulwelling asked Lawhead if she wanted to purchase the property from sellers herself and resell it to buyers. Lawhead declined to do so. Ulwelling's business partnership, respondent Ulwelling, Hollerud Schulz, acquired the property from sellers by warranty deed on August 11, 1999 and rented the property to buyers until they purchased the property on September 30, 1999. Lawhead attempted to collect a three percent commission on the sale of the property to buyers, but Ulwelling, on behalf of the partnership, refused to pay.
The articles and bylaws of the Austin Board of Realtors, Inc., and the Austin Multiple Listing Service, Inc., determine rights to commission allocation. Because MLS members are required to arbitrate contractual disputes with other member realtors, Lawhead submitted her claim to binding arbitration. The arbitration was limited to the issue of procuring cause. A panel of five arbitrators decided that Lawhead was not entitled to any commission on the sale. A procedural review tribunal reviewed the matter at Lawhead's request and affirmed the arbitration panel's decision. Lawhead then brought this lawsuit (1) alleging breach of contract, wrongful interference with contractual relations, and fraud and misrepresentation, (2) requesting vacation of the arbitration award, and (3) demanding payment of the commission and damages for mental suffering and emotional distress. The district court granted respondents' motion to dismiss the first three causes of action for failure to state a claim on which relief may be granted and denied Lawhead's request to vacate the arbitration award. This appeal followed.
The parties do not dispute that the MLS membership contract requires such disputes to be submitted to binding arbitration.
"To sustain a finding that an agent is the procuring cause of a sale, there must be evidence that [the agent] originated a course of events which without a break in their continuity created a cause of which the sale was the result. It is not enough that [the agent's] services merely contributed to the result. They must be the producing and effective means thereof." The Spring Co. v. Holle, 248 Minn. 51, 56, 78 N.W.2d 315, 318 (1956) (citations omitted).
DECISION
"When reviewing cases dismissed for failure to state a claim on which relief can be granted, the only question before [the reviewing court] is whether the complaint sets forth a legally sufficient claim for relief." Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997). Review is de novo. Leonard v. Northwest Airlines, Inc., 605 N.W.2d 425, 428 (Minn.App. 2000), review denied (Minn. Apr. 18, 2000), cert. denied 121 S.Ct. 183 (2000).
An arbitrator of a controversy is the final judge of both law and fact and the arbitrator's conclusions of law and findings of fact are binding, even if erroneous. Welch v. Buller, 481 N.W.2d 856, 858 (Minn.App. 1992), review denied (Minn. May 15, 1992). Lawhead argues that the arbitration was limited to the issue of procuring cause and that she has not been provided with an opportunity to present her claims based on (1) breach of contract, (2) tortious interference with contract, and (3) fraud and misrepresentation. The district court concluded that dismissal for failure to state a claim upon which relief could be granted was necessary because all of Lawhead's claims depend on the issue of procuring cause. We agree.
1. Breach of Contract
Lawhead's complaint alleges that respondent Ulwelling's conduct constitutes a breach of contract and violates principles of quantum meruit. The basis of a recovery in quantum meruit is that "the defendant has received a benefit from plaintiff which it is unjust for [the defendant] to retain without paying for it." Ylijarvi v. Brockphaler, 7 N.W.2d 314, 319 (Minn. 1942).
[T]he mere fact that a part performance has been beneficial is not enough to render the party benefited liable to pay for the advantage. It must appear that he has taken the benefit under circumstances sufficient to raise an implied promise to pay for the work done.
Id. at 319-20 (quoting Elliott v. Caldwell, 43 Minn. 357, 361, 45 N.W. 845, 847 (1890)).
Lawhead expected a commission on the sale of the house because the multiple listing agreement provided a three-percent commission to other MLS relators who procured a buyer for Ulwelling's listing. As determined in arbitration, however, Lawhead did not procure a buyer for the listing. Lawhead cannot relitigate the procuring cause issue in district court.
Recovery in quantum meruit is precluded by the existence of a valid express contract relating to the same matter. Elliott, 43 Minn. at 361, 45 N.W. at 847 ("[A]n express contract necessarily excludes a contemporaneous implied one in relation to the same matter."). Lawhead appears to be arguing that the facts gave rise to an implied promise by Ulwelling to pay a commission under any circumstances that resulted in buyers purchasing the house. But Minnesota law provides that no real estate broker
shall be entitled to or may bring or maintain any action in the courts for any commisson, fee or other compensation with respect to the purchase, sale, lease or other disposition or conveyance of real property, or with respect to the negotiation or attempt to negotiate any sale, lease or other disposition or conveyance of real property unless there is a written agreement with the [real estate broker].
Minn. Stat. § 82.33, subd. 2 (2000). To give effect to the terms of Minn. Stat. § 82.33, subd. 2, a broker cannot recover compensation under a quasi-contract theory. Krogness v. Best Buy Co., Inc., 524 N.W.2d 282, 286 (Minn.App. 1994), review denied (Minn. Jan. 25, 1995). The district court correctly dismissed Lawhead's breach of contract and quantum meruit claim for failure to state a claim on which relief can be granted.
2. Tortious interference with contract
The complaint identified the contract between Lawhead and buyers as the contract allegedly interfered with. That contract did not provide for any commission to Lawhead nor has she alleged a breach of that contract.
At oral argument, Lawhead asserted that Ulwelling interfered with the contract between Lawhead and Ulwelling to pay a three-percent commission for procuring a buyer for Ulwelling's listing. A party may not obtain review by raising the same general issue litigated below but under a different theory. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). Lawhead's failure to present this claim to the district court waives her right to raise it here. But we note that with respect to the tort of interference with contractual relations, a breach by a party of its own contract with the other party is not actionable. Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895, 901 (Minn. 1982). The district court correctly dismissed Lawhead's claim of interference with contract for failure to state a claim upon which relief may be granted.
3. Misrepresentation
Lawhead's misrepresentation claim is based on the purported offer by Ulwelling to pay her a commission if she "produced an acceptable purchase agreement." There is no factual basis in the complaint or elsewhere in the record for such an assertion. Lawhead's complaint states that the commission was due to any agent "who procured a purchaser" for the listed property. But the procurement issue was determined in arbitration, and the arbitrator's findings of law and fact on the merits of the claim are binding on the district court, even if erroneous. Welch, 481 N.W.2d at 858. The district court did not err in dismissing Lawhead's fraud and misrepresentation count for failure to state a claim on which relief may be granted.
4. Vacation of the award of an arbitrator
Lawhead also challenges the denial of her request to vacate the arbitration award. A district court may vacate an award of an arbitrator only in limited circumstances, such as where "[t]he award was procured by corruption, fraud or other undue means"; "there was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;" or "[t]he arbitrators exceeded their powers." Minn. Stat. § 572.19, subd. 1(1), (2), (3) (2000). Lawhead claims that Ulwelling failed to disclose that she sometimes served as a MLS arbitrator, and on that basis she alleges that partiality and/or misconduct prejudiced the proceedings. The record does not support Lawhead's allegation. The procedural review tribunal reviewed the arbitration proceedings and specifically found that (1) Ulwelling's membership was on the Professional Standards Committee, not the Arbitration Panel, (2) that membership in the Professional Standards Committee was not required to be disclosed to other parties in an arbitration proceeding, and (3) that no partiality or misconduct had occurred. Lawhead does not allege additional facts which would overcome this finding. See Minn.R.Civ.App.P. 128.02 (requiring candid statement of facts, including recitation of evidence supporting findings being challenged).
The district court correctly determined that there was no basis to set aside the arbitrator's decision and that the binding arbitration precludes relitigation of Lawhead's claims to the commission.