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Woischke v. Stursberg & Fine, Inc.

Court of Appeals of Minnesota

January 16, 2018

William Woischke, et al., Appellants,
v.
Stursberg & Fine, Inc., et al., Respondents,

         Pine County District Court File No. 58-CV-16-233

          Christopher J. Heinze, Anthony D. Johnson, Kirsten J. Libby, Libby Law Office, P.A., St. Paul, Minnesota (for appellants)

          Nicole M. Moen, Pari I. McGarraugh, Kyle W. Ubl, Fredrikson & Byron, P.A., Minneapolis, Minnesota (for respondents Stursberg & Fine, Inc., Henry Stursberg, Jeremy Stursberg, and Joel Zimmerman)

          Considered and decided by Ross, Presiding Judge; Johnson, Judge; and Bratvold, Judge.

         SYLLABUS

         A contract involving illegally conducted business is itself void and unenforceable if the legislature has expressly or implicitly declared its intent that such a contract be illegal. The legislature has expressly and implicitly indicated its intent that a person who contracts to receive a commission or fee to attempt to negotiate a real-estate sale or a loan secured by a mortgage under Minnesota Statutes section 82.55, subdivision 19 (2016), but who lacks a broker's license required by section 82.81, subdivision 1 (2016), has entered into an illegal contract, which is void and unenforceable as to the unlicensed broker as a matter of law.

          OPINION

          ROSS, Judge

         A Pennsylvania corporation contracted with the owner of a Minnesota mobile-home park to provide services "as a mortgage broker and financial consultant, " introducing the owner to a prospective buyer or, in the alternative, brokering the refinancing of the park. After the corporation arranged for the refinancing, the park owner refused to pay for the corporation's services and sued, claiming that the broker agreement was void as a matter of law because the corporation lacked a broker's license required by statute. The district court held that the contract was not void as a matter of law. We hold that the legislature has expressed or implied its intent that, when a person lacks the statutorily required license to broker a real-estate sale or refinancing, a contract entitling that person to compensation for those services is void as to that person as a matter of law. We therefore reverse and remand for additional proceedings.

         FACTS

         Woischke Enterprises LLC, owner of a mobile-home park in Pine County, entered into an agreement with Pennsylvania corporation Stursberg & Fine under which Stursberg & Fine would act "as a mortgage broker and financial consultant" and "introduce [Woischke to] an interested party who is a client of [Stursberg & Fine] . . . to purchase Woischke's Mobile Home and RV Park." Under the contract, if Woischke failed to sell the park, Woischke "has agreed to move forward with the refinance" of the park and "agree[d] to grant Stursberg & Fine an exclusive right to refinance" the park. A sale did not occur, and Woischke refinanced the park through Stursberg & Fine. Woischke's owners (William and Shirley Woischke) discovered that no Stursberg & Fine employee was a real-estate broker, mortgage broker, or loan broker licensed in Minnesota. After they informed Stursberg & Fine of this discovery, Stursberg & Fine contacted the Minnesota Department of Commerce, which advised Stursberg & Fine that a limited mortgage-broker's license was indeed required for the work it had performed. Stursberg & Fine applied for a limited broker's license. The department granted the license about a week later.

         Woischke refused to pay the contracted fee. It filed a seven-count complaint in district court against Stursberg & Fine and some of its current and former employees. The suit centered on Woischke's claim that the agreement was void because Stursberg & Fine was not licensed to provide the services rendered under the agreement. Stursberg & Fine did not answer the complaint. Instead it commenced arbitration proceedings in Pennsylvania under an arbitration clause in the agreement.

         Woischke moved the district court for a partial default judgment for Stursberg & Fine's failure to answer. Stursberg & Fine moved the district court to dismiss the case and compel arbitration. The district court considered the "sole question" to be whether the fee agreement "entered into by [the parties was] void as a result of [Stursberg & Fine's] lack of a limited mortgage broker's license." The district court held the agreement valid, compelled the parties to arbitrate, and dismissed the complaint. Woischke appeals.

          ISSUE

         Is the agreement between Woischke and Stursberg & Fine void as ...


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