Marcus & Millichap Inv. Serv. of Chicago Inc. v. Sekulovski

Decision Date23 March 2011
Docket NumberNo. 10–1352.,10–1352.
CourtU.S. Court of Appeals — Seventh Circuit
PartiesMARCUS & MILLICHAP INVESTMENT SERVICES OF CHICAGO, INC., Plaintiff/Counter–Defendant–Appellee,v.Tony SEKULOVSKI, Defendant/Counter–Plaintiff–Appellantv.Marcus & Millichap Real Estate Investment Services, Inc., Counter–Defendant–Appellee.

OPINION TEXT STARTS HERE

Fields Alexander (argued), Attorney, Beck, Redden & Secrest, Houston, TX, for PlaintiffAppellee.David B. Goodman (argued), Attorney, Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, Chicago, IL, for DefendantAppellant.Before EASTERBROOK, Chief Judge, and BAUER and KANNE, Circuit Judges.KANNE, Circuit Judge.

Real estate commercial brokerage Marcus & Millichap Real Estate Investment Services, Inc. (REIS), and its Illinois-based subsidiary, Marcus & Millichap Real Estate Investment Services of Chicago, Inc. (M & M Chicago), sued former agent Tony Sekulovski for breach of contract, unjust enrichment, conversion, fraud, and tortious interference. These claims were based on allegations that Sekulovski fraudulently misrepresented the work he and his partner contributed to various real estate transactions and that he misappropriated transactions and commissions when he terminated his relationship with the brokerage. Sekulovski counterclaimed for breach of contract, declaratory relief, unjust enrichment, and unlawful withholding of wages. At the end of the parties' presentation of evidence, the district court entered a judgment as a matter of law in favor of M & M Chicago on Sekulovski's statutory wage claim. The jury then found in M & M Chicago's favor on all counts. The district court denied Sekulovski's motions for a judgment as a matter of law or, alternatively, for a new trial on each count. Because we find that the district court did not err in its rulings, we affirm.

I. Background

Sekulovski began working with REIS in 1999 as a real estate agent for its Ohio subsidiary, M & M Ohio. REIS pools some administrative resources at the national level, providing ongoing access to all of its independent contractors regardless of location. But each REIS subsidiary operates as a distinct legal entity to comply with state licensing laws and enters into salesperson agreements with agents it hires as independent contractors. Each agreement must incorporate REIS's Independent Contractor Policy Manual (“Policy Manual”), and agents' continued affiliation with REIS depends upon their compliance with its requirements.

Sekulovski transferred to M & M Chicago in 2005, terminating his relationship with M & M Ohio. Sekulovski availed himself of REIS resources while working in Chicago. Yet despite Sekulovski “hanging his license” with M & M Chicago and REIS's policy requiring independent contractor agreements, Sekulovski never signed a written salesperson agreement with M & M Chicago. At trial, Sekulovski stated that he had an oral agreement with M & M Chicago that established his compensation schedule, but he admitted to no other details of his agency relationship. M & M Chicago argued its arrangement with Sekulovski—whether oral or implied—incorporated the Policy Manual.

REIS's independent contractors do not earn salaries, but receive commissions at the conclusion of real estate transactions. The commissions are divided between the subsidiary (throughout this case, M & M Chicago) and the agent or agents involved in the transaction. Until an agent meets a certain sales threshold each year, the commission is divided evenly between M & M Chicago and the agent. Once a senior agent reaches an annual threshold, however, the agent's share increases on a graduated scale up to seventy percent of the commission. If more than one agent is involved in a transaction, they submit a booking statement to M & M Chicago identifying the agents involved and allocating the amount of work accomplished by each. For example, the booking statement may show that Agent A performed two-thirds of the work and Agent B contributed one-third of the work to the transaction. The agents themselves agree to the allocations; M & M Chicago generally approves the arrangement without scrutiny, provided it is in writing. If one agent is compensated on the graduated scale and the other divides his share with M & M Chicago evenly, each receives a portion of the overall commission that reflects both the allocated work effort and the compensation scale.1

Mark Luttner—a contractor Sekulovski had mentored and supervised at M & M Ohio—followed Sekulovski to M & M Chicago. The two began an informal partnership in which they collaborated as real estate agents. At times they spoke of leaving REIS and forming their own real estate brokerage firm, though that plan never reached fruition. They initially split their commissions evenly, but in September 2006—when Sekulovski reached the graduated scale for the year—they began to change their booking statement allocations. Over the course of seventeen deals at issue in this case, Sekulovski claimed a 75–100% share of the commissions in his joint transactions with Luttner. When M & M Chicago began investigating the change, Sekulovski stated that his relationship with Luttner had deteriorated and that Luttner's share was reduced to reflect Luttner's lack of contributed work. M & M Chicago claims that Sekulovski convinced Luttner to approve the diminished or eliminated allocation by giving Luttner a kick-back after he received the commission; this arrangement would allow both Sekulovski and Luttner to receive a greater share at M & M Chicago's expense.2

Sekulovski resigned from M & M Chicago in June 2007, but he was unable to reach an agreement with M & M Chicago regarding distribution of commissions from his pending transactions. In apparent contravention of state law and the Policy Manual, Sekulovski directed a title company to pay two commissions to him rather than to the brokerage. He also affiliated with NAI Horizon (another national brokerage firm in Arizona), but continued to represent some clients with whom he had worked while at M & M Chicago. As a result, some transactions that commenced while Sekulovski had “hung his license” with M & M Chicago closed while he was with NAI Horizon. Sekulovski retained commissions from these transactions. M & M Chicago protested that those deals belonged to it, as the Policy Manual stated that “any and all employment of any kind or nature whatsoever by a salesperson in connection with the real estate business must be taken in the name of the firm.” M & M Chicago later asked one closing party to hold its commission payment in escrow until the controversy was resolved, rather than paying the commission to Sekulovski directly.

In order to resolve the continuing dispute, REIS and M & M Chicago sued Sekulovski in the U.S. District Court for the Northern District of Illinois. The parties stipulated to a dismissal of REIS's claims before trial, so it is a party to this appeal only as a Counter–DefendantAppellee. M & M Chicago sought damages based on breach of contract, unjust enrichment, conversion, fraud, and tortious interference theories. Sekulovski brought counterclaims for breach of contract, unjust enrichment, unlawful withholding of wages, and tortious interference with contract. Luttner testified on M & M Chicago's behalf at trial, stating that he and Sekulovski agreed to misrepresent allocations in booking statements in order to maximize their take. The jury received other evidence of the scheme, including emails purportedly exchanged between Luttner and Sekulovski confirming the kickback amounts. Sekulovski introduced bias evidence to impugn Luttner's credibility, but the district court excluded additional evidence Sekulovski proffered to further impeach him.

The district court granted M & M Chicago's motion for a judgment as a matter of law on Sekulovski's statutory wage claim at the conclusion of the evidence. A jury then rendered verdicts in favor of M & M Chicago on each of its claims and against Sekulovski on each of his remaining claims. The district court entered judgment on those verdicts and subsequently denied Sekulovski's post-trial motions for a judgment as a matter of law or, in the alternative, for a new trial on each claim. Sekulovski timely appealed the district court's final judgment.

II. Analysis

Sekulovski “hung his license” with M & M Chicago for over two years, using REIS staff and resources in his work. He claims to have had an oral agreement with M & M Chicago establishing a compensation schedule, but also argues that no contract governed their relationship because he never signed a new representation agreement after he moved to Chicago. His inconsistent arguments notwithstanding, we find that a contract clearly existed between Sekulovski and M & M Chicago. See Al's Serv. Ctr. v. BP Prods. N. Am., Inc., 599 F.3d 720, 726 (7th Cir.2010) (contract may be implied from the parties' conduct). Nothing in the record reasonably suggests that Sekulovski and M & M Chicago were not in a contractual relationship or that they did not expect the terms of the Policy Manual to govern their interactions, even in the absence of a signed agreement to that effect. With this implied-in-fact contract in mind, we turn to Sekulovski's articulated issues.

Sekulovski presents seven discrete issues with many subparts. Apparently he hoped that at least one of his buckshot arguments—which often stray from his identified issues—would lead to reversal. We group his allegations of error into four categories: evidentiary rulings, jury instructions, application of the Illinois Wage Payment and Collections Act, and denial of post-trial motions. We will analyze each category in turn.

A. Evidentiary Rulings

Sekulovski argues that the district court erred by limiting his cross-examination of Luttner and by excluding evidence allegedly demonstrating Luttner's bias. He contends that these rulings prejudiced him because the case...

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