Chretian v. Donald L. Bren Co.

Opinion

WIENER, J.

The sole question is whether the trial court ruled correctly in deciding a provision for compensation in the employment agreement between defendant Donald L. Bren Company (Bren), a real estate developer, and its salesperson plaintiff Leonard Chretian was unconscionable and therefore unenforceable. As we shall explain, we conclude the provision is not adhesive, oppressive or substantively unreasonable and not unconscionable. Accordingly, we modify the $18,938.82 judgment in favor of Chretian to $2,000 and, as modified, affirm the judgment.

[388]

Bren sells homes to the public through commissioned salespersons. Bren’s contract with its salespersons, including Chretian, provides for two separate commissions. The first commission of .65 percent of the sales price of the house is earned “for

obtaining

a fully executed purchase and sales agreement which subsequently closes escrow.” (Italics added.) The second commission of .35 percent of the sales price of the house is “for

servicing

the sale transaction through successful close of escrow.” (Italics added.) The contract further states that upon termination of his employment the salesperson is entitled to both commissions for escrows closed before the termination. For transactions pending at that date, however, only the .65 percent commission will be paid upon the close of escrow. The “[cjommission for

servicing

the sale transaction through successful close of escrow . . . shall not be deemed earned or payable with respect to any transaction pending as of the date of termination of Salesperson.” (Italics added.)

After resigning and receiving only his .65 percent commissions, Chretian filed suit to recover all sums due him including $16,938.82 representing the .35 percent commissions for property sales on which escrow was pending when he resigned. At trial Bren conceded liability of $2,000 for money improperly withheld for the late closing of an escrow on property Chretian purchased. The court found the compensation agreement was not a contract of adhesion but Chretian’s loss of $16,938.82 in commissions represented a forfeiture, unconscionable as a matter of law and therefore unenforceable as being contrary to public policy. Judgment was entered accordingly and this appeal by Bren ensued.