John Schlueter v. Edward Latek
683 F.3d 350
7th Cir.2012Background
- Plaintiff John Schlueter hired Latek to broker a sale of Karl’s Rental Center; sale proceeds were about $30 million.
- Latek billed $758,675 for services; Schlueter paid the fee and then sued for return of the fee on grounds Latek lacked a real estate broker license.
- Wisconsin Real Estate Practice Act § 452.01(2)(a) and related provisions govern who may negotiate the sale of a business or its goodwill.
- District court dismissed under in pari delicto, treating plaintiff and broker as equally at fault; Wisconsin law and amended statute are implicated.
- Key issue is whether ownership of stock constitutes an ‘interest in a business’ under the statute, and whether the plaintiff may recover as restitution or through quantum meruit.
- Court addresses whether there is an implied right of action for the violator’s profit, the voluntary-payment doctrine, and the propriety of joinder of Mr. Latek.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the brokerage fee recovery depend on in pari delicto/unclean-hands? | Schlueter is not at fault; plaintiff seeks restitution for unlicensed broker's violation. | Latek’s unlicensed status bars relief under in pari delicto. | In pari delicto defense does not bar relief here. |
| Does Wisconsin’s amended brokerage statute require a broker license to negotiate sale of stock or a business? | Ownership of stock can be an ‘interest in a business,’ implicating licensing when negotiating. | Amendments do not undermine Bertha; sale of stock may still trigger licensing issues. | Statutory interpretation uncertain, but alternative grounds pursued; decision on this issue not essential to affirmance. |
| Is there an implied right of action for the violator’s profits (restitution) under Wisconsin law? | Plaintiff seeks restitution of the fee as a bounty for discovering a violation. | Wisconsin lacks an implied right to recover the violator’s profits; statute provides deterrence via criminal penalties and non-sue remedy. | No implied right to recover the violator’s profits; restitution not available in this case. |
| Is the voluntary-payment doctrine applicable to bar recovery here? | Plaintiff argued lack of license knowledge does not permit recovery under doctrine. | Voluntary payment doctrine bars recovery when paid knowingly or without remedy. | Voluntary-payment doctrine inapplicable; no recovery on that basis. |
| Was joinder of Mr. Latek as a defendant proper against a disclosed principal agent? | Joinder may be appropriate where principal is undisclosed or where agent is personally liable. | Agency rule: agent not personally liable when acting for disclosed principal. | Mr. Latek should not have been joined as a defendant. |
Key Cases Cited
- Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299 (1985) (antitrust defense trumps contract in certain remedies)
- Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 (1968) (plurality on in pari delicto and related defenses)
- McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995) (in pari delicto/unclean-hands treated as defenses aligned in some contexts)
- Hernandez v. BNG Management Limited Partnership, No. 2011AP362, 2012 WL 1499826 (Wis. App. 2012) (Wisconsin appellate stance on unlicensed broker consequences)
- Hale v. Kreisel, N.W. 2d (Wis. 1927) (legacy rule: no recovery in quantum meruit for unlicensed brokers (old real estate context))
- Scheiber v. Dolby Laboratories, Inc., 293 F.3d 1014 (7th Cir. 2002) (quantum meruit when contract unenforceable; restitution context)
- City of Milwaukee v. Knox, 266 N.W.911 (Wis. 1936) (principles regarding restitution and unjust enrichment)
- Green v. Jones, 128 N.W.2d 1 (Wis. 1964) (implied rights of action against statutes—presumptions discussed)
- Landreth Timber Co. v. Landreth, 471 U.S. 681 (1985) (federal securities context: sale of stock vs. sale of business distinction)