Property Manager Entitled to Compensation for 17 Years of Past Services

Facts: A property manager was hired by his father-in-law, the owner of a struggling shopping center, to manage the property. The owner agreed to compensate the property manager at some point in the future, when or if the center became profitable. The property manager agreed, believing that he had a “deferred compensation deal” with the owner.

The property became very lucrative after the property manager brought in new tenants. The property manager asked to be compensated after working at the property for 17 years. When the owner refused to pay him, the property manager sued to collect what he was owed.

A trial court ruled in the property manager's favor, awarding him $240,250 in damages. The owner appealed.

Decision: The appeals court upheld the decision of the trial court in favor of the property manager, but reduced the award for damages.

Reasoning: The appeals court agreed with the trial court's determination that the property owner was entitled to compensation for his past services. It noted that, in order to succeed on his claim, the property manager had to prove: (1) that he performed the services in good faith; (2) that the owner accepted the services that were rendered; (3) an expectation of compensation therefor; and (4) the reasonable value of the services.

The appeals court ruled in the property manager's favor because it determined that the property manager had established that he had performed property management services and that the services were accepted by the owner. He also presented evidence concerning the reasonable value of the services. Contrary to the owner's contention, the property manager established that even though, at the time he performed the services, he had a “very good” relationship with the owner, he nevertheless had an expectation at the time he was performing his services that he would be compensated at some point in the future.

However, the appeals court agreed with the owner that the trial court had awarded the property manager damages that were excessively higher than the typical reasonable compensation for similar property management services, especially considering numerous documented deficiencies in his performance. Accordingly, the appeals court reduced the award to $87,743.22.

• Tesser v. Allboro Equipment Company, et al., May 2010