Appeal by defendant from order entered 7 June 2000 by Judge
Robert P. Johnston and judgment entered 28 July 2000 by Judge James
E. Lanning in Mecklenburg County Superior Court. Heard in the
Court of Appeals 4 December 2001.
Templeton & Raynor, P.A., by Kenneth R. Raynor and Erik A.
Schwanz, for plaintiff-appellee.
McGuire Woods L.L.P., by Erin E. Burke and Fred M. Wood, Jr.,
for defendant-appellant.
CAMPBELL, Judge.
Defendant Data Systems Network Corporation (“Data Systems”)
appeals from the trial court's grant of partial summary judgment in
favor of J. Alan Moore (“Plaintiff”) on the issue of Plaintiff's
entitlement to additional commissions on Data Systems' sale of the
Tivoli Enterprise Licensing Agreement (“Tivoli ELA”) to Branch
Banking & Trust Co. (“BB&T”). Data Systems also appeals from the
trial court's entry of judgment in favor of Plaintiff on his
remaining claims for commissions and unpaid expenses. By its
assignments of error, Data Systems contends that the trial courterred in: (1) granting Plaintiff's motion for partial summary
judgment, (2) awarding Plaintiff liquidated damages under the Wage
and Hour Act in connection with the grant of partial summary
judgment, (3) admitting evidence at trial concerning the grant of
partial summary judgment in favor of Plaintiff, (4) instructing the
jury on breach of contract and other general principles of contract
law; and (5) denying Data Systems' motion for a directed verdict at
the conclusion of all the evidence. We affirm.
The relevant factual and procedural history is as follows: On
28 October 1996, Plaintiff began working for Data Systems as Senior
Account Manager. As Senior Account Manager, Plaintiff worked as a
sales representative, responsible for selling a wide variety of
computer technology products and services offered by Data Systems,
including computer hardware, computer software, and customer
support services. In 1997 and 1998, Plaintiff concentrated
primarily on selling products offered by Unified Network Services
(“UNS”), a subsidiary in which Data Systems owned seventy percent
(70%) of the stock. In particular, Plaintiff focused his efforts
on selling the Tivoli ELA to BB&T. The Tivoli ELA is a complex
computer software network management program which was offered for
sale by Data Systems through its subsidiary UNS. Plaintiff worked
for Data Systems from 28 October 1996 until some point in 1998.
The termination date of Plaintiff's employment with Data Systems
was a principal matter of contention between the parties at trial.
Throughout his employment with Data Systems, Plaintiff was an at-
will employee. Plaintiff's compensation for 1997 and 1998 was based on
salary, commissions, and stock options, as set forth in Data
Systems' 1997 Sales Compensation Plan and 1998 Sales Compensation
Plan (collectively, “the Sales Compensation Plans”).
(See footnote 1)
Data
Systems' 1997 Sales Compensation Plan (“the 1997 Plan”) provided
for the payment of commissions as follows:
Commissions will be paid thirty days after the
company recognizes the revenues from the sale.
The gross margin shall be the basis for the
commission plan and a monthly report shall be
sent to each sales person for commission
verification. Commissions will be paid on the
30th of each month for the previous months
commissions due. In the event an employee
leaves the company, no future commissions will
be paid. The company policy states. “No
further compensation will be paid after an
employee leaves the company.”
Accordingly, commissions were not earned until the company actually
received revenue from the sale. The commissions then became due
and payable at the end of the following month. In the event an
employee left the company, the employee would not be paid
commissions on sales for which the company had not recognized
revenue prior to the employee's last day of work.
Under the 1997 Plan, Plaintiff was entitled to a sixteen
percent (16%) commission on the first $500,000.00 in gross margin
(i.e., gross profit)
(See footnote 2)
recognized by the company in the calendaryear on sales generated by Plaintiff. For the amount of gross
margin exceeding $500,000.00, Plaintiff was entitled to a nineteen
percent (19%) commission. The 1997 Plan provided that commissions
on the sale of services would be calculated at a forty percent
(40%) gross margin rate. The 1997 Plan also set forth the manner
in which gross margin was to be calculated on computer hardware
transactions as follows:
Gross margin on hardware transactions shall be
calculated and determined as the sales price
minus all associated costs, including freight
charges, warranty costs, pre-paid maintenance
charges, handling charges, staging costs,
storage fees, etc.
The 1997 Plan was silent as to the calculation of gross margin on
computer software transactions, such as the sale of the Tivoli ELA
to BB&T.
The 1997 Plan further provided the following guidelines for
expense reimbursements:
It is the policy of Data Systems Network
Corporation to reimburse all reasonable
documented expenses, consistent with the
published guidelines. It is the obligation of
each employee to submit timely expense
reimbursement forms for payment. Expenses
that exceed a ninety (90) day period may be
subject for non-compliance and therefore may
not be paid without special approval [from]
the VP of sales.
Finally, the 1997 Plan contained the following provisions
regarding modification of the Plan and termination of employment:
Data Systems Network Corporation reserves the
right to modify this plan and may elect tomake changes[,] and will do so, only in
written notice[,] and any and all changes will
be thirty (30) days prior to the changes
becoming effective. This plan supersedes any
and all previous plans either written or
communicated verbally relating to sales
compensation for Sales Representatives.
Data Systems Networks expressly reserves the
right to terminate any sales
representative['s] employment or participation
[in] this plan at any time, and for any reason
whatsoever and without cause . . . .
(Emphasis added).
Data Systems' 1998 Sales Compensation Plan (“the 1998 Plan”)
was similar in most respects to the 1997 Plan. The 1998 Plan again
based all commissions on gross margin, set a forty percent (40%)
gross margin rate for commissions on the sale of new services, and
carried forward the definition of gross margin on computer hardware
transactions contained in the 1997 Plan. The 1998 Plan was again
silent on how to calculate gross margin on computer software
transactions and retained the provision that no future commissions
would be paid after an employee left the company.
However, there were some important differences between the
1998 Plan and the 1997 Plan. The 1998 Plan added the following
provision concerning the payment of commissions:
It is also the policy of the company to
reserve the right to reduce 50% of commissions
owed in the event the sales person involved in
the transaction does not assist with the
collection effort of the aging receivables.
This 50% reduction of commissions will occur
if payment for the transaction extends beyond
90 days for commercial accounts and 120 days
for local and state government accounts . . .
It shall be at the VP of Sales['] discretion
to determine that the effort was not in line
with the policy for DSNC to collectreceivables in a timely and efficient manner.
In addition, the 1998 Plan increased the amount at which
commissions would be paid at a rate of nineteen percent (19%) of
gross margin from $500,000.00 to $600,000.00. Thus, the 1998 Plan
was less generous to the employee and more protective of the
employer. The 1998 Plan also added the following provision
concerning the payment of commissions for the sale of workshops:
All revenues for selling one of the qualified
workshops offered from the Strategic areas of
the company will pay a bonus for delivering
and invoicing these workshops. If the
workshop does not result in additional
business the revenue will be treated as
regular service business paid at the standard
rate that applies. If the workshop produces
the desired result of additional business then
a bonus amount of $5,000 of the $15,000
workshop price shall be paid instead of the
standard commission rate of 16% of the 40%
Gross Margin or $960. The maximum bonus to be
paid on any workshop will be $5,000. All
transactions for bonus must be submitted by
the sales person and must be approved by your
sales manager and the Vice President of Sales
before payment is paid.
Finally, the 1998 Plan reduced the time period in which
employees were required to submit expense reimbursement forms in
order to avoid being subject to non-compliance from ninety (90)
days to sixty (60) days.
In March 1997, Plaintiff began focusing his efforts on selling
the Tivoli ELA to BB&T. On 4 November 1997, Data Systems received
a commitment from BB&T to purchase support services to assist in
the implementation of the Tivoli ELA software network management
program. The parties agreed that the total cost of these supportservices would not exceed $2,960,000.00. In late December 1997,
BB&T's purchase of the Tivoli ELA program was finalized, and, on or
about 29 January 1998, BB&T paid Data Systems $6,637,500.00 for the
Tivoli ELA.
On 5 March 1998, Plaintiff was paid a $50,000.00 finder's fee
on the sale of the Tivoli ELA to BB&T. According to the affidavit
of Michael Grieves, President and CEO of Data Systems (“the
President”), Plaintiff had previously agreed to this finder's fee
as his commission for the Tivoli ELA sale due to the unique nature
of the transaction and the high associated costs related to the
sale. However, Plaintiff wrote the President on 31 March 1998
requesting full payment of commissions for the sale of the Tivoli
ELA under the 1998 Plan. According to Plaintiff's calculations,
the gross margin on the sale of the Tivoli ELA was $846,281.00, of
which Plaintiff was entitled to $146,146.19. Having already
received the $50,000.00 finder's fee, Plaintiff claimed he was owed
$96,146.19. According to Plaintiff, he never received a response
to this letter.
Throughout 1998, Plaintiff continued working with BB&T on
implementation of the Tivoli ELA program. In March 1998, Plaintiff
secured a purchase order from BB&T in the amount of $521,035.00 for
additional computer hardware. In addition, on 26 March 1998,
Plaintiff secured a purchase order from BB&T in the amount of
$450,000.00 for implementation services. These implementation
services were in addition to the $2,960,000.00 worth of
implementation services purchased by BB&T in November 1997. Plaintiff also continued to work with BB&T on the implementation
services purchased in November 1997. Plaintiff expected his
commissions from the $2,960,000.00 sale of services to total
$206,000.00. However, as of 15 June 1998, he had only received
$68,000.00 in commissions from that sale of implementation
services.
On or about 1 June 1998, a group of UNS minority shareholders
exercised their option to purchase the shares of UNS owned by Data
Systems. As part of the transaction, UNS assumed certain assets
and liabilities belonging to Data Systems, including some of the
assets and liabilities related to the Tivoli ELA product and its
sale to BB&T. On 30 June 1998, Plaintiff received his last
paycheck from Data Systems. Plaintiff also received a letter dated
30 June 1998 informing him that his insurance coverage was being
terminated as of that date, but that he could continue coverage for
eighteen months by taking the steps set forth in the letter. On 15
July 1998, Plaintiff began receiving a paycheck from UNS. As a
result, Data Systems contends that Plaintiff's last day of
employment with Data Systems was 30 June 1998, and, thus, pursuant
to the 1998 Sales Compensation Plan, he is not entitled to
commissions on sales for which revenue was received by Data Systems
after 30 June 1998.
Plaintiff admits that he was made aware in June 1998 that Data
Systems and UNS were restructuring their relationship and that
afterwards he would be working for UNS. However, Plaintiff
contends that he was never given the specifics of the newrelationship, he never received an employment agreement from UNS,
nor did UNS ever hire him following the purchase of the outstanding
shares of UNS from Data Systems. Accordingly, although he had
received the letter informing him of the termination of his
insurance coverage and he had begun receiving paychecks from UNS,
Plaintiff was under the impression that he was still working for
Data Systems. Plaintiff continued working with BB&T on
implementation of the Tivoli ELA program in the same capacity in
which he had worked prior to Data Systems' sale of its interest in
UNS. Plaintiff contends that he worked for Data Systems until 10
September 1998, when he resigned because he had not been paid the
commissions due him nor had he been reimbursed for the expenses he
had incurred on behalf of Data Systems.
On 27 August 1998, prior to his resignation, Plaintiff filed
the complaint in the instant action. In Count One, Plaintiff
alleged that Data Systems had failed to pay him $103,812.16 in
commissions on sales for which Data Systems had received payment.
In Count Two, Plaintiff alleged that Data Systems' failure to pay
these commissions was a violation of the Wage and Hour Act
entitling him to liquidated damages in the amount of $103,812.16.
In Count Three, Plaintiff asserted a claim for reimbursement of
expenses in the amount of $2,685.91. In Count Four, Plaintiff
alleged that Data Systems had breached its employment agreement
with him by selling its interest in UNS and wrongfully assigning
to UNS the sales generated by Plaintiff in connection with the
Tivoli ELA program, thereby preventing Plaintiff from receiving thecommissions from those sales. Plaintiff's prayer for relief on
Count Four was for $13,308.36.
On 31 March 2000, Plaintiff filed a motion for summary
judgment on all issues raised in his complaint. In response, Data
Systems filed a motion for partial summary judgment on the issue of
commissions due Plaintiff from the November 1997 sale of
approximately $2.9 million in implementation services to BB&T. At
the hearing on the parties' cross-motions, Plaintiff acknowledged
that the affidavit filed by Data Systems in response to Plaintiff's
motion for summary judgment rendered Plaintiff's motion moot as to
all issues other than Plaintiff's entitlement to commissions from
the November 1997 sale of support services. Following the hearing,
the trial court denied the parties' cross-motions for partial
summary judgment on the issue of commissions due from the November
1997 sale. In its order, the trial court also allowed Plaintiff's
motion to amend his complaint to increase the amount of recovery
prayed for in Count Four to $148,515.00.
On 3 May 2000, Plaintiff filed a motion for partial summary
judgment on the issue of commissions allegedly due him on the sale
of the Tivoli ELA to BB&T. On 7 July 2000, Judge Johnston entered
an order granting plaintiff's motion for partial summary judgment
on this issue. Judge Johnston found that Data Systems owed
Plaintiff commissions in the amount of $146,146.19 for the sale of
the Tivoli ELA to BB&T and that Plaintiff had only received
$50,000.00. Thus, the court ordered Data Systems to pay Plaintiff
$96,146.19 plus interest. The court further ordered Data Systemsto pay Plaintiff an additional $96,146.19 in liquidated damages
under the Wage and Hour Act.
The case then went to trial on the remaining issues raised by
Plaintiff's amended complaint. Following trial, the jury returned
as its verdict the following answers to the issues submitted by the
trial court:
1. Did Data Systems Network Corporation
breach its agreement to pay to the Plaintiff,
Alan Moore, commissions and expenses?
ANSWER: Yes.
2. What amount of money damages is the
Plaintiff, Alan Moore, entitled to recover?
ANSWER: $190,088.19.
The trial court entered judgment consistent with the jury's
verdict. The trial court further found that Data Systems was
liable for liquidated damages under the Wage and Hour Act equal to
the amount of damages found by the jury. Finally, the trial court
taxed the costs of the action, including a reasonable attorneys'
fee of $26,000.00, against Data Systems.
Data Systems filed timely notice of appeal to both the trial
court's 7 June 2000 order granting partial summary judgment in
favor of Plaintiff and the trial court's 28 July 2000 judgment.
I. Pre-Trial Issues
Data Systems first contends that the trial court erred in
awarding partial summary judgment in favor of Plaintiff on the
issue of additional commissions on the sale of the Tivoli ELA.
Data Systems argues that a genuine issue of material fact existed
as to (1) whether Plaintiff was entitled to additional commissionson the sale of the Tivoli ELA, and (2) if so, in what amount.
It is well settled that summary judgment is appropriate only
“if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that any
party is entitled to a judgment as a matter of law.” N.C. R. Civ.
P. 56(c) (1999). “The movant must clearly demonstrate the lack of
any triable issue of fact and entitlement to judgment as a matter
of law.”
Marcus Bros. Textiles, Inc. v. Price Waterhouse, LLP, 350
N.C. 214, 220, 513 S.E.2d 320, 324 (1999). In ruling on a motion
for summary judgment, the evidence of record must be considered in
the light most favorable to the party opposing the motion.
Id.
“'[A]ll inferences of fact from the proofs proffered at the hearing
must be drawn against the movant and in favor of the party opposing
the motion.'”
Page v. Sloan, 281 N.C. 697, 706, 190 S.E.2d 189,
194 (1972) (citation omitted). The Supreme Court reiterated the
strict standards by which the propriety of summary judgment is to
be determined in
Creech v. Melnik, 347 N.C. 520, 495 S.E.2d 907
(1998), stating:
Before summary judgment may be entered,
it must be clearly established by the record
before the trial court that there is a lack of
any triable issue of fact. In making this
determination, the evidence forecast by the
party against whom summary judgment is
contemplated is to be indulgently regarded,
while that of the party to benefit from
summary judgment must be carefully
scrutinized. Further, any doubt as to the
existence of an issue of triable fact must be
resolved in favor of the party against whom
summary judgment is contemplated.
Id. at 526, 495 S.E.2d at 911 (citations omitted).
In arguing that a genuine issue of material fact existed as to
Plaintiff's entitlement to additional commissions on the sale of
the Tivoli ELA, Data Systems contends that the trial court failed
to account for the associated costs related to the sale of the
Tivoli ELA in determining the additional commissions to which
Plaintiff was entitled. Data Systems maintains that the 1998 Sales
Compensation Plan required that associated costs be deducted in
calculating the gross margin on the sale of the Tivoli ELA. We
disagree.
As previously noted, the 1998 Plan provided in pertinent part:
Gross margin on hardware transactions shall be
calculated and determined as the sales price
minus all associated costs, including freight
charges, warranty costs, pre-paid maintenance
charges, handling charges, staging costs,
storage fees, etc.
However, this provision of the 1998 Plan only applied to hardware
transactions. The 1998 Plan is silent as to the manner in which
gross margin was to be calculated for software transactions. Thus,
we look to other evidence in the record to determine how gross
margin was to be calculated on software transactions in determining
Plaintiff's commissions.
In his deposition testimony, Tracy Behar, Eastern Region Vice
President of Sales, stated that the sale of the Tivoli ELA to BB&T
was a software transaction. Behar further testified that, under
Data Systems' Sales Compensation Plans, the gross margin on all
software transactions was calculated without deducting the
associated costs. According to Behar's testimony, the gross marginon software transactions was calculated by simply deducting the
cost of the product sold from the revenue generated by the sale.
Behar further testified that, based on the spirit of Data Systems'
Sales Compensation Plans, Plaintiff was entitled to much more than
the $50,000.00 finder's fee paid by the company. In fact, Behar
testified that he had expressed this opinion to the President, who
responded by stating that the amount of commission called for by
the Sales Compensation Plan was simply too much for Plaintiff to
make on the Tivoli ELA transaction.
The only evidence presented by Data Systems tending to refute
the testimony of Tracy Behar was the affidavit of Michael Grieves,
the President of the company. Data Systems contends that the
President's affidavit raised a genuine issue of material fact as to
the amount of commissions to which Plaintiff was entitled. In his
affidavit, the President states that he had a conversation with
Plaintiff in late 1997, in which he explained that the sale of the
Tivoli ELA was not covered by the Sales Compensation Plan due to
its unique nature and the unusually high amount of associated costs
expected to be incurred in relation to the sale. The President's
affidavit further states that he spoke to Plaintiff about the
$50,000.00 finder's fee and Plaintiff agreed that it was a fair and
reasonable commission.
However, the Wage and Hour Act (“the Act”) does not allow an
employer to orally reduce the wages or commissions due an employee.
The Act defines the term “wage” to include such wage-related
benefits as “sick pay, vacation pay, severance pay,
commissions,bonuses, and other amounts promised when the employer has a policy
or a practice of making such payments.” N.C. Gen. Stat. § 95-
25.2(16) (1999) (emphasis added)
.
Once an employer has chosen the
wages and benefits for its employees, the employer is required to
notify the employees, orally or in writing, at the time of hiring,
of the promised wages, the day and place for payment, and the
policies on commissions and other wage-related benefits. N.C. Gen.
Stat. § 95-25.13;
Narron v. Hardee's Food Systems, Inc., 75 N.C.
App. 579, 582-83, 331 S.E.2d 205, 207 (1985). An employer may
change the wages and benefits offered at any time, so long as the
employer notifies its employees, in
writing or through a posted
notice maintained in a place accessible to its employees, of such
changes in promised wages prior to the time of such changes.
N.C.G.S. § 95-25.13(3);
Narron, 75 N.C. App. at 583, 331 S.E.2d at
207.
In the instant case, Data Systems' policy on commissions was
set forth in the 1997 and 1998 Sales Compensation Plans. The Sales
Compensation Plans were silent as to the manner in which gross
margin was to be calculated on software transactions. The
testimony of Tracy Behar reveals that the gross margin on software
transactions was to be calculated without regard to associated
costs. Further, there is nothing in the Sales Compensation Plans
indicating that sales of certain products, like the Tivoli ELA, are
not covered by its terms. Once Plaintiff was notified of the
manner in which commissions would be paid, the Wage and Hour Act
prevented Data Systems from changing its policies on payment ofcommissions unless Plaintiff was notified of such changes in
writing or through a posted notice. The affidavit of the President
of Data Systems indicates that the discussions he had with
Plaintiff and the agreements they reached concerning the finder's
fee were all done orally. Such oral reductions in promised wages
and commissions is prohibited by the Wage and Hour Act.
Accordingly, the President's affidavit does not raise a genuine
issue of material fact as to Plaintiff's entitlement to additional
commissions on the sale of the Tivoli ELA.
Viewed in the light most favorable to Data Systems, we
conclude that the evidence shows that the 1998 Sales Compensation
Plan, under which Plaintiff's commissions on the Tivoli ELA
transaction were to be calculated, did not require that associated
costs be deducted in determining the gross margin on a software
transaction. In addition, any attempt on behalf of Data Systems to
reduce the commissions to which Plaintiff was entitled under the
1998 Sales Compensation Plan necessarily had to be in writing to
conform with the Wage and Hour Act. There is no evidence in the
record of such written reduction. Thus, we hold that the trial
court did not err in granting partial summary judgment in favor of
Plaintiff. Accordingly, Data Systems' first and second assignments
of error are overruled.
Data Systems' next two assignments of error relate to the
trial court's imposition of liquidated damages in connection with
its entry of partial summary judgment in favor of Plaintiff. Inits order granting Plaintiff's motion for partial summary judgment,
the trial court made the following determination:
8. The Defendant owes to the Plaintiff an
additional sum of $96,146.19 for commissions
due on the sale of the Tivoli Enterprise
Licensing Agreement to BB&T, and the Defendant
has failed to show that its failure to pay
said commission was made in good faith or that
it had reasonable ground for believing the
failure to pay the commission for this sale
was not a violation of the Wage and Hour Act.
Accordingly, the trial court ordered that Plaintiff recover
$96,146.19 in liquidated damages pursuant to N.C. Gen. Stat. § 95-
22.22(a1).
Data Systems first contends that the trial court erred in
awarding liquidated damages because Data Systems did not violate
the Wage and Hour Act. However, based on our resolution of Data
Systems' first two assignments of error, we summarily overrule this
contention and move to Data Systems' argument that the imposition
of liquidated damages was improper because the company acted with
a good faith belief that its manner of compensating Plaintiff for
the sale of the Tivoli ELA was not in violation of the Wage and
Hour Act.
N.C.G.S. § 95-25.22, which addresses the recovery of unpaid
wages, provides:
(a) Any employer who violates the provisions
of . . . G.S. 95-25.6 through 95-25.12 (Wage
Payment) shall be liable to the employee or
employees affected in the amount of . . .
their unpaid amounts due under G.S. 95-25.6
through 95-25.12, as the case may be, plus
interest at the legal rate set forth in G.S.
24-1, from the date each amount first came
due.
(a1) In addition to the amounts awarded
pursuant to subsection (a) of this section,
the court
shall award liquidated damages in an
amount equal to the amount found to be due as
provided in subsection (a) of this section,
provided that if the employer shows to the
satisfaction of the court that the act or
omission constituting the violation was in
good faith and that the employer had
reasonable grounds for believing that the act
or omission was not a violation of this
Article, the court
may, in its discretion,
award no liquidated damages or may award any
amount of liquidated damages not exceeding the
amount found due as provided in subsection (a)
of this section.
N.C.G.S. § 95-25.22 (emphasis added);
see also Hamilton v. Memorex
Telex Corp., 118 N.C. App. 1, 14-15, 454 S.E.2d 278, 285 (1995).
In
Hamilton, this Court interpreted N.C.G.S. § 95-25.22(a1) as
follows:
[T]he employer bears the burden of
demonstrating that liquidated damages should
not be imposed. However, even if an employer
shows that it acted in good faith, and with
the belief that its action did not constitute
a violation of the Act, the trial court may
still, in its discretion, award liquidated
damages in any amount up to the amount due for
unpaid wages. When the employer cannot make
such a showing, the trial court has no
discretion and must award liquidated damages.
Id. at 15, 454 S.E.2d at 285.
Data Systems contends that it acted in good faith and with the
reasonable belief that its payment to Plaintiff of the $50,000.00
finder's fee for the sale of the Tivoli ELA was not a violation of
the Wage and Hour Act. Assuming, arguendo, that Data Systems met
its burden of showing that it acted in good faith and with a
reasonable belief that it was not violating the Wage and Hour Act,
the trial court still maintained the discretion to imposeliquidated damages equal to the amount found due under N.C.G.S. §
95-22.2(a). See Id. A trial court may be reversed for abuse of
discretion only upon a showing that its ruling was so arbitrary
that it could not have been the result of a reasoned decision.
White v. White, 312 N.C. 770, 777, 324 S.E.2d 829, 833 (1985).
Having reviewed the record in the instant case, we cannot conclude
that the trial court's decision to impose liquidated damages on
Data Systems was so arbitrary that it could not have been the
result of a reasoned decision. Thus, Data Systems' third and
fourth assignments of error are overruled.
II. Trial Issues
Data Systems contends that the trial court committed
reversible error in instructing the jury on breach of contract and
other general contract law principles because the instructions
given by the trial court contradicted those provisions of the Wage
and Hour Act that controlled the issues to be determined by the
jury in the instant case. We disagree.
Although the trial court is not required to explain the
application of the law to the evidence, “it remains the duty of the
court to instruct the jury upon the law with respect to every
substantial feature of the case.”
Mosley & Mosley Builders v.
Landin Ltd., 87 N.C. App. 438, 445, 361 S.E.2d 608, 612 (1987);
N.C. R. Civ. P. 51(a) (2001). The trial court has wide discretion
in presenting the issues to the jury and no abuse of discretion
will be found where the issues are sufficiently comprehensive to
resolve all factual controversies and to enable the court to renderjudgment fully determining the cause.
Murrow v. Daniels, 321 N.C.
494, 499-500, 364 S.E.2d 392, 396 (1988). Further, it is well
established in this jurisdiction “that in reviewing jury
instructions for error, they must be considered and reviewed in
their entirety.”
Id. at 497, 364 S.E.2d at 395.
At the jury charge conference, Data Systems requested that the
trial court limit its instructions to the jury to the pertinent
provisions of the Wage and Hour Act, specifically N.C. Gen. Stat.
§ 95-25.7, which permits “[w]ages based on bonuses, commissions or
other forms of calculation” to be forfeited by an employee if “the
employee has been notified in accordance with G.S. 95-25.13 of the
employer's policy or practice which results in forfeiture.”
N.C.G.S. § 95-25.7 (1999). N.C.G.S. § 95-25.13 requires every
employer to make available to its employees, in writing, all
employment practices and policies with regard to promised wages.
According to Data Systems, all of Plaintiff's claims for recovery
were covered by either the 1997 Plan or the 1998 Plan, both of
which notified Plaintiff of the conditions for forfeiture of earned
wages in accord with N.C.G.S. § 95-25.7. Accordingly, Data Systems
requested that the first issue submitted to the jury be:
[D]id defendant notify Alan Moore of
conditions for loss or forfeiture of future
commissions in advance of the time that Alan
Moore was terminated?
In addition, Data Systems requested that the jury not be instructed
on certain basic principles of contract law, including the
definition of a contract, what constitutes a breach of contract,and the duty of good faith and fair dealing between parties to a
contract.
Despite Data Systems' objections, the trial court submitted
the first issue to the jury as follows:
Did Data Systems Network Corporation breach
its agreement to pay to the plaintiff, Alan
Moore, commissions and expenses?
The trial court also instructed the jury as to what constitutes a
contract, what constitutes a breach of contract, and the duty of
good faith and fair dealing between parties to a contract. In
addition, the trial court gave the following instruction related to
N.C.G.S. § 95-25.7:
With respect to commissions an employer
can cause a loss or forfeiture of such pay if
he has notified the employee of the conditions
for the loss or forfeiture in advance of the
time when the pay is earned.
On appeal, Data Systems maintains that the trial court's
instructions on the duty of good faith and fair dealing allowed the
jury to rule in favor of Plaintiff in contravention of the express
provisions of the Wage and Hour Act. Data Systems contends that
the only criteria for withholding earned wages under the Wage and
Hour Act is proper notice under N.C.G.S. § 95-25.7, that the duty
of good faith and fair dealing does not apply to the performance of
an employment agreement which meets the notice requirements set
forth in N.C.G.S. §§ 95-25.7 and 95-25.13, and, that in instructing
the jury on this duty, the trial court “allowed the jury to simply
point to a violation of some amorphous and undefined standard of
good faith and fair dealing and undo what the Wage and Hour Actspecifically allows employers to do, though perhaps some results
may appear to be harsh.”
Having reviewed the trial court's instructions in their
entirety, we conclude that the trial court did not abuse its
discretion in presenting the issues to the jury in the manner in
which it did. The record reveals that the trial court instructed
the jury on N.C.G.S. § 95-25.7 in a manner nearly identical to that
requested by Data Systems. In addition, we do not find that the
trial court's instructions on the duty of good faith and fair
dealing confused the jury about the meaning and application of
N.C.G.S. § 95-25.7, or led the jury to return a verdict that was
inconsistent with the intent and purpose behind the Wage and Hour
Act. Thus, this assignment of error is overruled.
By its next assignment of error, Data Systems contends that
the trial court erred in allowing Plaintiff to introduce evidence
regarding the trial court's pre-trial award of partial summary
judgment in favor of Plaintiff. We disagree.
The record reveals that prior to the introduction of any
evidence regarding the dispute between the parties over the amount
of commissions due Plaintiff for the sale of the Tivoli ELA, the
trial court ruled that evidence related to the Tivoli ELA sale
would be limited to the fact that there was a dispute and that
Plaintiff claimed a larger commission for the sale than the one he
received from Data Systems. In addition, the trial court ruled
that no evidence would be allowed as to whether the disputeconcerning the commissions on the Tivoli ELA sale had been
judicially determined.
Afterward, Plaintiff was allowed to testify that he was not
paid a commission for the Tivoli ELA sale within the time
prescribed under the 1998 Plan. Plaintiff was also allowed to
testify that, after he made a written inquiry into his commission
for the sale of the Tivoli ELA, he received a “special check that
was cut for approximately a third of what was calculated to be due
to [him] according to the compensation plan.” In addition,
Plaintiff was allowed to testify that there were high risks
involved with the Tivoli ELA sale, and that it required a large
amount of work on his part.
The trial court did not admit any evidence concerning whether
the parties' dispute over the commissions for the Tivoli ELA sale
had been judicially determined. In fact, Plaintiff expressly
testified that the amount of commissions and expenses he was
seeking to recover at trial did not include any commission from the
sale of the Tivoli ELA. We conclude that the evidence that was in
fact admitted concerning the parties' dispute over the Tivoli ELA
commission was relevant background information that in no way
prejudiced Data Systems or confused the jury.
By its final assignment of error, Data Systems contends that
the trial court erred in denying its motion for a directed verdict.
We disagree.
Upon a motion for a directed verdict pursuant to N.C. R. Civ.
P. 50(a), “the evidence must be considered in the light mostfavorable to the non-moving party, resolving all conflicts in his
favor, and giving him the benefit of all reasonable inferences
flowing from the evidence in his favor.”
United Laboratories, Inc.
v. Kuykendall, 322 N.C. 643, 661, 370 S.E.2d 375, 387 (1988). The
question presented by a motion for a directed verdict is whether
the evidence is sufficient to entitle the non-movant to have a jury
decide the issue in question.
Id. A directed verdict motion by a
defendant may be granted only if the evidence is insufficient, as
a matter of law, to justify a verdict for plaintiff.
Population
Planning Assoc. v. Mews, 65 N.C. App. 96, 98, 308 S.E.2d 739, 741
(1983) (citing
Arnold v. Sharpe, 296 N.C. 533, 251 S.E.2d 452
(1979)). “A motion for a directed verdict shall state the specific
grounds therefor[,]” and grounds not asserted in the trial court
may not be asserted on appeal.
Broyhill v. Coppage, 79 N.C. App.
221, 339 S.E.2d 32 (1986). The purpose of the rule that specific
grounds for a motion for directed verdict be stated is to apprise
the court and the adverse parties of the grounds for the motion,
and to allow the adverse party to attempt to meet the defects in
its proof in order to avoid a judgment notwithstanding the verdict
at the close of the trial.
Feibus & Co. v. Construction Co., 301
N.C. 294, 271 S.E.2d 385 (1980)
. Thus, the question before this
Court is whether the evidence, when taken in the light most
favorable to Plaintiff, was sufficient to allow the jury to decide
the issues in question. In reviewing the trial court's denial of
Data Systems' motion for directed verdict, we limit our review tothose grounds specifically asserted at trial in support of Data
Systems' directed verdict motion.
At the close of Plaintiff's evidence, Data Systems moved for
a directed verdict on (1) Plaintiff's claim for a commission on the
20 March 1997 workshop, (2) Plaintiff's claim for commissions owed
on invoice 27845, (3) Plaintiff's claim for commissions on the
purchase order for hardware in March 1998, and (4) Plaintiff's
claim for commissions on the purchase order for services on 26
March 1998. In addition, Data Systems moved for directed verdict
on the issue of whether the Sales Compensation Plans met the
requirements of the Wage and Hour Act “as far as providing notice
to the employee of those circumstances when future commissions or
claimed commissions can be forfeited.” In making its motion to the
trial court, Data Systems conceded that it was not entitled to
directed verdict on the primary issue in contention between the
parties--the date on which Plaintiff's employment with Data Systems
terminated, 30 June 1998 or 10 September 1998. At the close of all
the evidence, Data Systems renewed its motion for a directed
verdict.
On appeal, Data Systems argues that it was entitled to a
directed verdict on the issue of Plaintiff's entitlement to
reimbursement for certain expenses incurred after his termination
and/or for which Plaintiff failed to submit timely expense
reimbursement forms. Having failed to raise this issue as a ground
in support of its directed verdict motion at trial, Data Systems is
precluded from raising it on appeal. Data Systems also argues on appeal that the trial court erred
in denying its motion for a directed verdict on (1) Plaintiff's
claim for additional commissions for the 4 November 1997 sale of
implementation services, and (2) Plaintiff's claims for commissions
on the two purchase orders secured in March 1998, one for services
and the other for hardware. However, Data Systems' sole argument
on appeal as to these claims is that Plaintiff's employment with
Data Systems was terminated on 30 June 1998. Having conceded at
trial that it was not entitled to a directed verdict on the issue
of Plaintiff's termination date, Data Systems cannot raise this
issue in support of its contentions on appeal.
Accordingly, we are left to determine whether Data Systems was
entitled to directed verdict as to (1) the additional commissions
for invoice 27845, (2) and the commission for the 1997 workshop.
As to invoice 27845, Data Systems contends that it was entitled to
a directed verdict because the invoice was paid more than ninety
(90) days following the transaction and the 1998 Sales Compensation
Plan allowed the company to reduce by fifty percent (50%) any
commission arising from a transaction that was not paid within
ninety (90) days. However, Plaintiff testified at trial that the
delay in payment was due to an internal billing error. Plaintiff
further introduced into evidence a copy of an electronic mail
message indicating that Plaintiff's direct supervisor, Doug Brooks,
had considered the situation and determined that Plaintiff was not
responsible for the delay in payment and was entitled to the
remainder of the commission on the invoice. We conclude thatPlaintiff presented sufficient evidence to entitle the jury to
consider the issue of additional commissions on invoice 27845.
Finally, Data Systems contends that it was entitled to a
directed verdict on the issue of Plaintiff's entitlement to a
$5,000.00 commission on the workshop performed in 1997 because the
1997 Sales Compensation Plan did not provide for commissions for
workshops. However, Data Systems' sole witness at trial testified
that Plaintiff was in fact paid a $5,000.00 commission for other
workshops conducted in 1997. Therefore, we conclude that Data
Systems was not entitled to a directed verdict on that issue.
In conclusion, we affirm the trial court's grant of partial
summary judgment in favor of Plaintiff, and we affirm the trial
court's subsequent entry of final judgment in favor of Plaintiff.
Affirmed.
Judges GREENE and McCULLOUGH concur.
Report per Rule 30(e).
Footnote: 1