La. Civ. Code Ann. art. 1966 provides that an obligation cannot exist without a lawful cause. Cause is the reason that a party obligates itself. The cause of an obligation is unlawful when the enforcement of the obligation would produce a result prohibited by law or against public policy. A contract is absolutely null when it violates a rule of public order, as when the object of a contract is illicit or immoral. A contract that is absolutely null may not be confirmed. Persons may not by their juridical acts derogate from laws enacted for the protection of the public interest. Any act in derogation of such laws is an absolutely nullity.
Applicant, a Louisiana real estate broker, filed suit against respondent, an out-of-state real estate brokerage corporation, to recover commissions allegedly due to him under the parties' brokerage agreement. The 19th Judicial District Court for the Parish of East Baton Rouge (Louisiana) held that the agreement was null and entered summary judgment for the corporation. The broker appealed. The parties entered into the brokerage agreement because former La. Rev. Stat. Ann. § 37:1437(A) and a former Louisiana Real Estate Commission regulation established a residency requirement for Louisiana real estate brokers' licenses. Out-of-state brokers desiring to do Louisiana business were required to cooperate with Louisiana brokers and give a resident broker at least 50 percent of any fees or commissions. The trial court held that the statute and regulation violated the Privileges and Immunities Clause of the Constitution, and then dismissed the broker's demands as unenforceable.
Was a Louisiana statute that established a residency requirement for real estate brokers’ licenses was unconstitutional?
First, the court held that the statute and regulation were indeed unconstitutional and that the parties' contract based upon them was null. In particular, persons could not by their juridical acts derogate from laws enacted for the protection of the public interest. Second, a real estate broker is not entitled to payment, even on a quantum meruit basis, when he has no express or implied contract with the party from whom he seeks a commission. Nevertheless, the trial court erred in dismissing all of the broker's claims against the corporation since he stated a viable claim for unjust enrichment. The court affirmed the grant of summary judgment finding that the former Louisiana statute and regulation were unconstitutional, as well as the finding that the parties' contract was unenforceable. However, the court remanded the matter for further proceedings to determine whether the broker was entitled to damages for unjust enrichment.