Opinion
NO. 4:02-CV-0701-A
May 29, 2003
MEMORANDUM OPINION and ORDER
Came on for consideration the motion of defendants, Business Layers, Inc., ("Business Layers") and the Texas Workforce Commission ("TWC"), for summary judgment. The court, having considered the motion, the response of plaintiff, Steven Knight, the record, the summary judgment evidence, and applicable authorities, makes the following determination.
I. Plaintiff's Claims
Plaintiff filed his original petition on July 17, 2002, in the 17th Judicial District Court of Tarrant County, Texas. The action was removed by notice of removal filed August 16, 2002.
Plaintiff alleges: In May 2000, he was employed by Business Layers, Inc., in California and had a written agreement entitling him to commissions on sales calculated based upon actual invoicing (the "2000 letter agreement"). Plaintiff was later transferred to Texas where, on February 8, 2001, he executed a new commission agreement pursuant to which commissions would be earned when payments were collected and received in Business Layers's bank accounts (the "2001 commission agreement"). Plaintiff was terminated in September 2001 and did not receive the commissions he was due. He filed a claim with the TWC for unpaid commissions, but his claim was denied.
Plaintiff asserts causes of action based on the alternative contentions that he is due commissions under the 2000 letter agreement because the 2001 commission agreement (1) is not supported by adequate consideration, (2) is unenforceable due to duress, and (3) is unenforceable due to fraudulent inducement. He also asserts a claim for breach of contract, alleging that he was not properly compensated under either commission agreement. Finally, plaintiff asserts a claim for violation of the "Texas Payday Law" and asks the court to set aside the decision of the TWC denying his claim for commissions.
II. Grounds of the Motion
Defendants assert four grounds in support of their motion. First, plaintiff cannot establish that the 2001 commission agreement should be set aside because of duress, failure of consideration, or fraudulent inducement. Second, plaintiff cannot establish that Business Layers breached the 2001 commission agreement. Third, plaintiff cannot establish that Business Layers breached the 2000 letter agreement. And, fourth, plaintiff cannot prevail on his Texas Payday Act claim because substantial evidence supports the ruling of the Texas Workforce Commission.
III. Applicable Summary Judgment Principles
A party is entitled to summary judgment on all or any part of a claim as to which there is no genuine issue of material fact and as to which the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The moving party has the initial burden of showing that there is no genuine issue of material fact. Anderson, 477 U.S. at 256. The movant may discharge this burden by pointing out the absence of evidence to support one or more essential elements of the non-moving party's claim "since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). Once the moving party has carried its burden under Rule 56(c), the non-moving party must do more than merely show that there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The party opposing the motion may not rest on mere allegations or denials of pleading, but must set forth specific facts showing a genuine issue for trial. Anderson, 477 U.S. at 248, 256. To meet this burden, the nonmovant must "identify specific evidence in the record and articulate the `precise manner' in which that evidence support[s] [its] claim[s]." Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994). An issue is material only if its resolution could affect the outcome of the action. Anderson, 477 U.S. at 248. Unsupported allegations, conclusory in nature, are insufficient to defeat a proper motion for summary judgment. Simmons v. Lyons, 746 F.2d 265, 269 (5th Cir. 1984)
The standard for granting a summary judgment is the same as the standard for a directed verdict. Celotex Corp., 477 U.S. at 323. If the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial. Matsushita, 475 U.S. at 597.
IV. Undisputed Evidence
The following is an overview of evidence pertinent to the motion for summary judgment that is undisputed in the summary judgment record:
By letter dated May 22, 2000, Business Layers offered plaintiff a position as "Channel Sales Manager." Plaintiff accepted the company's offer by signing and dating the letter. The letter set forth a commission rate and provided that plaintiff's compensation package and commission would be reevaluated in December 2000. Defs.' App. at 79. On or about February 8, 2001, plaintiff signed a document titled "Business Layers, Inc. Commission Plan." Id. at 81-82. The 2001 commission agreement provided that commissions would only be earned when payments were collected and received in the bank accounts of Business Layers and that plaintiff would only be paid commissions after termination for those eligible sales for which payment was collected and received on or before the last day of the month in which his employment was terminated. Id.
On June 11, 2001, Business Layers received a purchase order from Chevron for approximately 5.5 million dollars' worth of software. On July 16, 2001. Business Layers received and deposited into its account a payment in the amount of $784,747.30, representing the first payment due on the Chevron account. On July 31, 2001, Business Layers paid plaintiff a commission of $25,837.53. Plaintiff complained that the commission had not been properly calculated and was paid an additional sum. By letter dated September 13, 2001, Business Layers terminated plaintiff's employment. On October 3, 2001, Business Layers deposited into its account a payment in the amount of $425,000.00 on the Chevron account. The payment had been received on October 3 or the night before. Pl.'s App. at 68. No commission was paid to plaintiff on that payment.
On December 7, 2001, plaintiff submitted a wage claim to the TWC, alleging that he was due compensation under the 2001 commission agreement. Defs.' App. at 102-03. The TWC investigated the claim and issued an opinion that plaintiff was not entitled to recover any further commissions, because his agreement with Business Layers provided that he would not be entitled to commissions paid after the month employment ended. Id. at 155.
V.
Whether the 2001 Commission Agreement is Unenforceable
Plaintiff offers three alternatives in support of his contention that the 2001 commission agreement is not enforceable. He has not established that a genuine issue of material fact exists as to any of them. Moreover, the summary judgment evidence establishes as a matter of law that the 2000 letter agreement could not govern the payment of commissions in any event. By its terms, the 2000 letter agreement applies only to commissions earned in 2000 by plaintiff in his position as Channel Sales Manager. Defs. App. at 79. And, it specifically states that plaintiff's "compensation package and commission will be reevaluated in December of 2000." Id. Even if it could be argued that the letter agreement terms carried over to later years, those terms were merged into the 2001 commission agreement. Fish v. Tandy Corp., 948 S.W.2d 886, 898 (Tex.App.-Fort Worth 1997, writ denied); Leon Ltd. v. Albuquerque Commons P'ship, 862 S.W.2d 693, 700 (Tex.App. — El Paso 1993, no writ). Plaintiff accepted the change in employment terms by continuing to work for Business Layers after being notified of the change. Hathaway v. General Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986); L.G. Balfour Co. v. Brown, 110 S.W.2d 104, 108 (Tex.Civ.App. — Fort Worth 1937, no writ).
Under Texas law, in order to set aside a contract obtained through duress, plaintiff must establish that his employer threatened to do something it had no legal right to do, that there was some illegal exaction, fraud, or deception, and that the restraint was imminent and of such a nature as to destroy plaintiff's free agency without present means of protection. Brown v. Cain Chem., Inc., 837 S.W.2d 239, 244 (Tex.App. — Houston [1st Dist.] 1992, writ denied). Here, plaintiff focuses on the circumstance that he had sold his home in California and contracted to buy a home in Texas at the time Business Layers presented him with the 2001 commission agreement. He says that but for that circumstance he would not have agreed to the 2001 commission agreement.See King v. Bishop, 879 S.W.2d 222, 224 (Tex.App.-Houston [14th Dist.] 1994, no writ). He wholly fails to address, however, the matter of an illegal threat. That is, unless Business Layers threatened to do something it had no right to do, there can have been no duress. Martinez v. IBP, Inc., 961 S.W.2d 678, 684 (Tex.App.-Amarillo 1998, pet. denied); Brown v. Aztec Rig Equip., Inc., 921 S.W.2d 835, 845-46 (Tex.App.-Houston [14th Dist.] 1996, writ denied). There is no evidence of such a threat.
The court notes that the circumstances were of plaintiff's own making. Plaintiff "wanted to move out of California. There is no disputing that." Defs.' App. at 38. Plaintiff wanted a full sales region to himself. Id. at 34.
Plaintiff's second argument is that the 2001 commission agreement fails for lack of consideration. Consideration is a present exchange bargained for in return for a promise — either a benefit to the promisor or a detriment to the promisee. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 841 (Tex. 2000); Roark v. Stallworth Oil Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991). Under Texas law, a written contract is presumed to be supported by consideration. Simpson v. MBank Dallas, N.A., 724 S.W.2d 102, 107 (Tex.App.-Dallas 1987, writ ref'd n.r.e.). In other words, the law assumes that the parties intend for a contract to be effectual and not nugatory. Texas Gas Utils. Co. v. Barrett, 460 S.W.2d 409, 412 (Tex. 1970). Where, as here, an employee accepts modified compensation terms by continuing to render services after notice of the changes, the new terms are supported by consideration and reflect a meeting of the minds. Hathaway, 711 S.W.2d at 229.
The case upon which plaintiff relies, Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642 (Tex. 1994), is inapposite. Light discusses covenants not to compete, which are subject to special provisions of the Texas Business and Commerce Code and must meet particular requirements in order to be enforceable. 883 S.W.2d at 645.
As a third alternative, plaintiff urges that the 2001 commission agreement fails because he was fraudulently induced to sign it. To establish fraudulent inducement, plaintiff must show that Business Layers made a material representation that was false, that Business Layers knew the representation was false or made it recklessly without knowledge of its truth, and that the representation was intended to be acted on, was relied upon, and caused injury. Formosa Plastics Corp. USA v. Presidio Eng'rs Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998); Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex. 1983). Here, despite plaintiff's argument to the contrary, plaintiff has not come forward with evidence to raise a genuine fact issue as to Business Layers's intent to defraud. Plaintiff has not shown that Business Layers failed to pay him the commissions due in accordance with the 2001 commission agreement prior to his termination. And, in any event, mere failure to perform is not evidence of fraud. Formosa, 960 S.W.2d at 48-49.
VI.
Whether Business Layers Breached Its Contract
Plaintiff contends that if the 2001 commission agreement is the operative agreement, Business Layers breached that agreement by failing to pay him the commission due. To support this contention, he would have the court speculate that Business Layers received the second payment on the Chevron account in September 2001, the month he was terminated. Plaintiff testified that he had no facts to support his belief. Defs.' App. at 61-62. Opinions and conclusory statements are not competent summary judgment proof. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Plaintiff has not come forward with any probative summary judgment evidence to establish a genuine fact issue as to a breach of the 2001 agreement.
Defendants alternatively urge that plaintiff cannot show that Business Layers breached the 2000 letter agreement. For the reasons previously discussed, the 2000 letter agreement does not govern the payment of commissions plaintiff seeks to recover.
VII. Whether the Decision of the Texas Workforce Commission is Supported by Substantial Evidence
Plaintiff's final claim is that the decision of the TWC should be set aside. Judicial review of a TWC decision is limited to a determination of whether there is substantial evidence to support a ruling of the agency.Mercer v. Ross, 701 S.W.2d 830, 831 (Tex. 1986). The Commission's decision is presumed valid. Id. Tex. Employment Comm'n v. Lewis, 777 S.W.2d 817, 819 (Tex.App.-Fort Worth 1989, no writ). The burden is on plaintiff to show that the decision is not reasonably supported by substantial evidence. Mercer, 701 S.W.2d at 831; Lewis, 777 S.W.2d at 819. Substantial evidence is more than a mere scintilla, but it need not be a preponderance. Arrellano v. Tex. Employment Comm'n, 810 S.W.2d 767, 769 (Tex.App.-San Antonio 1991, writ denied). The court may not set aside the decision merely because testimony was conflicting or disputed or because it did not compel the result reached by the Commission. Fireman's Policemen's Civil Serv. Comm'n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex. 1984). Plaintiff has not raised a genuine fact issue that the decision is without substantial basis.VIII. ORDER
For the reasons discussed herein,
The court ORDERS that defendants' motion for summary judgment be, and is hereby, granted; that plaintiff take nothing on his claims against defendants; and, that such claims be, and are hereby, dismissed with prejudice.
The court further ORDERS that defendants have and recover their court costs from plaintiff.