Biewald v. Seven Ten Storage Software, Inc.

Citation: 113 N.E.3d 881Docket: AC 17-P-30

Court: Massachusetts Appeals Court; October 31, 2018; Massachusetts; State Appellate Court

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All slip opinions and orders are preliminary and subject to formal revision, with the official versions found in advance sheets and bound volumes of the Official Reports. Errors should be reported to the Reporter of Decisions at the Supreme Judicial Court in Boston. In the case of Oliver C. Biewald vs. Seven Ten Storage Software, Inc. (appeal No. 17-P-30), Biewald initiated action against his former employer and its executives over unpaid sales commissions. The Superior Court dismissed most claims on summary judgment, but a subsequent jury trial ruled largely in favor of Biewald, awarding damages for violations of the Massachusetts Wage Act and breach of contract. However, the trial judge later vacated the verdict in favor of the defendants, stating that Biewald’s claims were negated by clear terms in his employment agreement, and even if the agreement was ambiguous, the evidence did not support the jury's verdict. Biewald's appeal, challenging the ruling and dismissals, along with a postjudgment cost award to the defendants, was ultimately affirmed. Background details reveal that Biewald was employed as vice president of strategic sales with an annual salary of $60,000 and specific commission structures based on sales and guaranteed contracts, including a 50% commission on sales to designated companies and an additional 5% on guaranteed revenue contracts.

Biewald's employment agreement classified him as an at-will employee, allowing for termination at any time with or without cause. Upon termination, only specific sections of the agreement would remain effective; notably, sections 3.4 and 3.4.1 were excluded. In September 2009, Biewald facilitated a distributor agreement between Seven Ten and EMC Corporation, which fell under section 3.4 but did not guarantee revenue as per section 3.4.1, since EMC was not obligated to make purchases. Seven Ten was required to pay EMC $51,000 for participation in EMC's 'Select' program, while also struggling financially.

In October 2009, Seven Ten terminated Biewald but proposed to negotiate new employment terms and temporarily increased his salary to $75,000, while gradually reducing his commission rate. Negotiations ensued, focusing on Biewald’s earned commissions. By late November, Biewald's compensation was altered to salary-only, leading to his complete termination on December 2, 2009. Seven Ten later paid Biewald commissions at the reduced rate for certain purchase orders but refused payment for others, arguing the new compensation terms.

In response, Biewald filed a wage complaint and initiated legal action claiming entitlement to a fifty percent commission on all relevant purchase orders. A jury ruled in his favor, awarding him $10,730 for prior commissions and $807,376 for unpaid commissions after his termination. However, the trial judge later vacated the verdict, ruling for the defendants, which led to the current appeal.

A motion for judgment notwithstanding the verdict involves a legal question reviewed with the evidence viewed favorably toward the nonmoving party, in this case, Biewald. The critical point is whether any evidence supports a reasonable inference in Biewald's favor. Biewald contends the trial judge incorrectly ruled that his employment agreement unequivocally terminated his right to commissions on EMC-related orders after termination. Contract interpretation, including ambiguity, is a legal question subject to de novo review. The court evaluates the contract language independently, considering the entire contract, and clear language is interpreted in its ordinary sense. An ambiguity arises only if reasonable differing opinions exist on the contract's meaning. 

Biewald argues that section 3.4 of the agreement allows for multiple interpretations, asserting his right to a commission vested upon making a 'Sale,' with only payment awaiting 'Consideration.' He claims his commission right vested upon the execution of the EMC contract on September 2, 2009, while payment awaited a purchase order. However, the court disagrees, stating that section 3.4 does not distinguish between the right to a commission and the right to payment. Both rights depend on conditions being met: a 'Sale' and 'Consideration.' Since section 3.4 was not among the provisions surviving termination, Biewald's rights under this section did not persist unless both conditions were satisfied. The court notes that although the EMC contract may qualify as a 'Sale,' no 'Consideration' was present at its execution, as EMC only became obligated to pay upon submitting a purchase order.

Biewald's commission rights vested only upon the submission of a purchase order, meaning he was entitled to commissions specified in his employment agreement solely for orders submitted by October 31, 2009. Consequently, he had no entitlement to commissions for purchase orders submitted on November 20, 24, or 30, 2009, or for any subsequent EMC-related purchase orders. The jury verdict was deemed unsustainable under the employment agreement's language. 

Biewald contended that the trial judge erred in ruling the jury verdict unsupported even if the agreement was ambiguous, but he failed to provide extrinsic evidence to support his interpretation. Thus, the judgment notwithstanding the verdict in favor of the defendants was appropriate.

Regarding summary judgment, the court evaluates such decisions de novo, favoring Biewald as the nonmoving party. The defendants needed to demonstrate no genuine material facts were at issue to justify a judgment as a matter of law. In Biewald's retaliation claim under G. L. c. 149, 148A, he lacked direct evidence of retaliatory motive and thus needed to establish a prima facie case, which requires showing protected conduct, adverse action, and a causal connection. While he could potentially meet the first two criteria, he could not establish a causal link between his complaints and the adverse actions taken against him, particularly the October 9, 2009, notice of termination, which preceded any alleged protected conduct. Biewald argued that subsequent actions, such as a reduction in commission rates and termination, were retaliatory, but the defendants asserted these actions were due to a failure to agree on a new contract.

Biewald contends that the defendants' reason for terminating his employment was pretextual; however, the judge determined that as an at-will employee, Biewald could not mandate the terms of his retention. Consequently, the defendants were justified in obtaining summary judgment. Regarding the breach of the implied covenant of good faith and fair dealing (count VII), Biewald argues that his claim should have survived summary judgment because Seven Ten allegedly terminated his employment to deny him commissions under the EMC contract. Nevertheless, Seven Ten provided a legitimate business rationale for the termination, aiming to meet the demands of an 'angel' investor, and Biewald failed to challenge this explanation with any evidence. Thus, summary judgment was appropriate for this count as well. Additionally, Biewald appealed the trial judge's decision to award the defendants $3,464.60 in costs under Mass. R. Civ. P. 54 (e), which covered expenses for six depositions and two document subpoenas. Despite only one transcript being utilized at trial and no documents produced from the subpoenas, the court found no abuse of discretion in the cost award. The judgment and the order awarding costs were affirmed.