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NO. COA01-1057
NORTH CAROLINA COURT OF APPEALS
Filed: 18 June 2002
HARRY C. SALVAGGIO,
Plaintiff-Appellee
v
.
NEW BREED TRANSFER CORP.,
Defendant-Appellant
Appeal by defendant and cross-appeal by plaintiff from
judgment entered 26 March 2001 by Judge A. Moses Massey in Guilford
County Superior Court. Heard in the Court of Appeals 15 May 2002.
Elliot, Pishko, Gelbin & Morgan, P.A., by David C. Pishko, for
plaintiff-appellee.
Kilpatrick Stockton LLP, by Leon E. Porter, Jr. and Elliot A.
Fus, for defendant-appellant.
WALKER, Judge.
Plaintiff initiated this action on 17 May 1999 alleging
defendant had breached the compensation provision of an employment
agreement negotiated between the parties. The pertinent facts are
not in dispute. Defendant is a New Jersey corporation engaged in
the acquisition, movement and transfer of materials and finished
products. On 6 January 1997, plaintiff began working as a Project
Controller for defendant's Greensboro affiliate. On that day, the
parties executed an Employment, Confidentiality and Non-Compete
Agreement (the Agreement). Section 2 of the Agreement stated in
relevant part:
COMPENSATION: In consideration of the services
rendered hereunder, [defendant] agrees to pay
to [plaintiff] an annual salary of $68,000.00
per annum, less deductions. Also. ..[plaintiff] will accrue a bonus of
$12,000.00, less deductions, at the end of the
first full year of employment. An additional
$12,000.00 bonus, less deductions, will accrue
at the end of the second year of employment.
The full $24,000.00 bonus, less deductions,
will be payable upon the completion of the
second year of employment.
In March 1998, plaintiff voluntarily terminated his employment with
defendant. Thereafter, he sent a letter to defendant requesting
payment of a $12,000.00 bonus which defendant refused.
The trial court concluded that the language in Section 2
pertaining to the payment of a bonus is ambiguous. Thereafter,
based on the stipulations and evidence presented at trial, the
trial court found that the parties had intended plaintiff would
have a vested right to receive a bonus of $12,000.00, and that this
bonus would be payable two years from the date of hiring. It then
concluded defendant had breached the agreement and therefore
plaintiff should recover $12,000.00 minus deductions. However, the
trial court also concluded defendant had a good faith basis for
disputing plaintiff's claim and ordered defendant only to pay
plaintiff $12,000.00 minus deductions together with interest at
the legal rate from the date of this Judgment until paid . . . .
I.
With its appeal, defendant maintains the trial court erred, as
a matter of law, in concluding the language of Section 2 is
ambiguous. Rather, it contends the language plainly and
unambiguously conditions plaintiff's receipt of bonus compensation
upon his completing two years of employment. The principal objective in the interpretation of a contract's
provisions is to ascertain the intent of the parties. Holshouser
v. Shaner Hotel Grp. Props. One, 134 N.C. App. 391, 397, 518 S.E.
2d 17, 23 (1999), aff'd per curiam, 351 N.C. 330, 524 S.E.2d 568
(2000). Where the language of a contract is clear and only one
reasonable interpretation exists, the courts must enforce the
contract as written . . . . Woods v. Nationwide Mut. Ins. Co.,
295 N.C. 500, 506, 246 S.E.2d 773, 777 (1978). However, if a
contract contains language which is ambiguous, a factual question
exists, which must be resolved by the trier of fact. Crider v.
Jones Island Club, Inc., 147 N.C. App. 262, 266-67, 554 S.E.2d 863,
866 (2001).
The trial court's determination of whether the language of a
contract is ambiguous is a question of law [and an appellate
court's] review of that determination is de novo. Bicket v.
McLean Securities, Inc., 124 N.C. App. 548, 553, 478 S.E.2d 518,
521 (1996), disc. rev. denied, 346 N.C. 275, 487 S.E.2d 538
(1997)(citations omitted). An ambiguity exists where the language
of a contract is fairly and reasonably susceptible to either of the
constructions asserted by the parties. Glover v. First Union
National Bank, 109 N.C. App. 451, 456, 428 S.E.2d 206, 209 (1993).
Stated differently, a contract is ambiguous when the writing
leaves it uncertain as to what the agreement was . . . . Barrett
Kays & Assoc. v. Colonial Building Co., 129 N.C. App. 525, 528, 500
S.E.2d 108, 111 (1998)(quoting International Paper Co. v. Corporex
Constructors, Inc., 96 N.C. App. 312, 317, 385 S.E.2d 553, 556(1989)). The fact that a dispute has arisen as to the parties'
interpretation of the contract is some indication that the language
of the contract is, at best, ambiguous. St. Paul Fire & Marine
Ins. Co. v. Freeman-White Assoc., Inc., 322 N.C. 77, 83, 366 S.E.2d
480, 484 (1988); see also Glover, 109 N.C. App. at 456, 428 S.E.2d
at 209.
Here, Section 2 provides that plaintiff will accrue a bonus
of $12,000.00, less deductions at the end of his first full year
of employment. It also provides that the full bonus will be
payable upon the completion of the second year of employment. The
ordinary meaning of accrue is [t]o come into existence as a
claim that is legally enforceable. The American Heritage College
Dictionary 9 (3d ed. 1997). Plaintiff maintains the parties use of
the word accrue demonstrates their intention that he would be
entitled to a $12,000.00 bonus upon the completion of his first
year of employment. Nonetheless, he concedes that he would not
receive the bonus until two years after his start date. In
contrast, defendant argues the language in Section 2 demonstrates
the parties' intention that plaintiff would only be entitled to a
bonus if he completed the full two years of employment. To accept
either of the parties' interpretations would require us to alter
the expressed language of Section 2. Thus, we conclude Section 2
is uncertain as to the parties' agreement concerning whether
plaintiff would be entitled to a $12,000.00 bonus if he elected to
terminate his employment after working only one year. As such, weagree with the trial court's conclusion that the language of
Section 2 is ambiguous.
Additionally, the record supports the trial court's finding
that the parties intended that plaintiff would be entitled to a
$12,000.00 bonus, even if he voluntarily terminated his employment
during his second year. Plaintiff testified that during employment
negotiations, he informed defendant of his desire for an annual
compensation of $80,000.00. Defendant replied that, because of its
financial condition, it could meet plaintiff's requirement only if
his compensation were structured as an annual salary of $68,000.00
with a $12,000.00 bonus and the parties agreed to defer paying the
bonus for two years. Further, defendant's Chief Executive Officer,
Louis DeJoy (Mr. DeJoy), testified that he interpreted Section 2 to
mean that plaintiff would only be entitled to a $24,000.00 bonus
upon his completing two years of employment. However, Mr. DeJoy
conceded that if defendant had terminated plaintiff after a full
year of employment, plaintiff would have been entitled to receive
a $12,000.00 bonus.
Thus, there was sufficient evidence before the trial court to
support its finding that the parties intended that, at the end of
one year of employment, plaintiff would have a vested right to a
bonus of $12,000.00. See Barnhardt v. City of Kannapolis, 116 N.C.
App. 215, 224-25, 447 S.E.2d 471, 477, disc. rev. denied, 338 N.C.
514, 452 S.E.2d 807 (1994)(where the trial court sits without a
jury, the court's findings of fact are conclusive if supported by
competent evidence, even though other evidence might sustaincontrary findings). We affirm that portion of the trial court's
order which awards plaintiff $12,000.00 minus deductions.
II.
In his cross-appeal, plaintiff contends the trial court erred
in its conclusion that he was entitled to interest from the date of
the judgment rather than from the date of defendant's breach.
Pursuant to N.C. Gen. Stat. § 24-5(a) [i]n an action for breach of
contract . . . the amount awarded on the contract bears interest
from the date of breach. N.C. Gen. Stat. § 24-5(a)(2001).
Although defendant agrees N.C. Gen. Stat. § 24-5(a) is applicable
to this case, it maintains that, because the trial court
essentially rewrote Section 2 of the Agreement, a breach could
not have occurred until the date the judgment was entered.
It is well established that a breach of contract occurs when
a party fails to perform a contractual duty which has become
absolute.
See Millis Construction Co. v. Fairfield Sapphire
Valley, Inc., 86 N.C. App. 506, 510, 358 S.E.2d 566, 569 (1987).
Here, the trial court concluded that plaintiff was entitled to
receive a bonus in the amount of $12,000.00, less deductions, on
January 6, 1999. Hence, defendant breached the agreement when it
failed to pay plaintiff the bonus as of that date. Nevertheless,
the trial court also concluded that defendant had a good faith
basis for disputing the plaintiff's claim, and therefore the
plaintiff is not entitled to the payment of pre-judgment interest
on the amount of damages awarded . . . . We are unaware of any
appellate interpretation which holds that N.C. Gen. Stat. § 24-5(a)has a good faith exception. Indeed, the plain language of the
statute indicates otherwise. Accordingly, we conclude the trial
court erred in determining that plaintiff was not entitled to
payment of pre-judgment interest as of 6 January 1999.
Affirmed in part and reversed in part.
Judges McCULLOUGH and BRYANT concur.
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