Opinion
Civil Action No. 00-1174 section "L"(4)
September 12, 2000.
ORDER AND REASONS
Before the Court is the motion of plaintiff Mr. Stephen P. Petagna for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. This motion was taken under submission by the Court on the briefs. After a review of the applicable law, the record, and the memoranda in support and opposition, plaintiffs motion for summary judgment is GRANTED in part and DENIED in part.
I. BACKGROUND
In this suit, plaintiff is seeking recovery of unpaid commissions, together with statutory penalties, attorney's fees and costs for commissions that Mr. Petagna claims he earned prior to his resignation from defendant, Hiller Investments Incorporated ("Hiller"). At issue in this summary judgment motion is whether any of Mr. Petagna's claims are barred by La. Civ. Code art. 3494's three-year prescriptive period.
Hiller sells and services commercial fire protection equipment. Mr. Petagna was employed by Hiller as a salesperson between October 1, 1991 and May 6, 1997.
Mr. Petagna was compensated by a base salary plus commissions. Hiller's policy is that commissions are not paid to salespeople on the orders that they book until the orders are completed, invoiced and shipped to customers. When Mr. Petagna resigned, he had booked a number of orders that he has not receive commissions on from Hiller. Plaintiff filed suit alleging that Hiller owes him commissions for those orders.
Defendant filed a counterclaim seeking a declaratory judgment on the issue of prescription. Defendant argues that under LA. Civ. Code Ann. art. 3495, plaintiffs claims are subject to a three-year prescriptive period. Defendant requested a judgment declaring that any claim for commissions based on orders booked by Mr. Petagna before April 17, 1997 is barred by prescription.
Plaintiff filed a Motion for Summary Judgement seeking a determination of whether or not plaintiffs claims have prescribed. Plaintiffs Motion further seeks dismissal of defendant's counterclaim.
II. LEGAL STANDARD
Summary judgment will be granted if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. When presented with a motion for summary judgment, the Court must view the facts and evidence in the light most favorable to the non-moving party. See Crescent Towing v. M/V Anax, 40 F.3d 741, 743 (5th Cir. 1994). If the movant demonstrates the absence of a genuine issue of material fact, "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cii. 1995). "[A] dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the moving party." Id.
The burden of demonstrating the existence of a genuine issue is not met by "metaphysical doubt" or "unsubstantiated assertions." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.s. 574, 586, (1986)). The Court must "resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little, 37 F.3d at 1075. If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. Matsushita, 475 U.S. at 588.
III. ANALYSIS
The issue is whether any of Mr. Petagna's claims for unpaid commissions are barred by La. Civ. Code Ann. art. 3494's three-year prescriptive period. It is well-established Louisiana jurisprudence that prescriptive statutes must be strictly construed against prescription and in favor of the obligation sought to be extinguished. Petre v. Living Centers-East, Inc., 935 F. Supp. 808, 815 (E.D.La. 1996); Bustamento v. Tucker, 607 So.2d 532, 537 (La. 1992). If two possible constructions exist, the construction which favors maintaining an action should be adopted. Petre, 935 F. Supp. at 815; Bustamento, 607 So.2d at 537.
The applicable prescriptive period is three years pursuant to La. Civ. Code Ann. art. 3494, which provides:
The following actions are subject to a liberative prescription of three years:
(1) An action for the recovery of compensation for services rendered, including payment of salaries, wages, [and] commissions.
La. Civ. Code Ann. art. 3494(1).
This prescriptive period commences to run "from the day payment is exigible." La. Civ. Ann. art. 3495. Under Article 3495, "exigible" means "[d]emandable" or "requirable" and an "exigible debt" is a "liquidated and demandable or matured claim." Buras v. Schultz, 752 So.2d 981, 985 (La.App. 4th Cir. 2000) (citing Black's Law Dictionary (5th ed. 1979)).
Hiller's policy is not to pay salespeople commissions until the orders that they book are completed, invoiced and shipped to customers. Hiller takes the position that the prescriptive period began to run when Mr. Petagna booked the individual orders and, therefore, all claims for commissions due on any orders booked before April 17, 1997 have prescribed. Plaintiff argues that while commissions are fully earned when the salesperson books the order, the commissions are not demandable by the salesperson until the defendant has completed, invoiced and shipped the order to the customer and the prescription period does not commence until the date that the jobs were so completed which date(s) plaintiff suggests is within the prescriptive period.
As plaintiff points out, the point at which a debt becomes demandable is determined by the nature of the relationship between the parties. If Mr. Petagna could have demanded payment of the commissions from Hiller on the date that the orders were booked, then the prescriptive period would commence on that date. However, under Hiller's policy, Mr. Petagna could not have demanded the commissions until the orders were completed, invoiced and shipped.
The plaintiff cites several cases that demonstrate that the prescriptive period begins to run only when the employee has met the conditions imposed by the employer to demand the payment. See, e.g., Buras, 752 So.2d at 982-83 (finding that the prescriptive period did not begin to run on a former court reporter's claim for past due compensation which, by statute, could not be paid until certain funds became available to the court, until those funds were made available); D'Spain v. D'Spain, 527 So.2d 309 (La.App. 5th Cr. 1988) (holding that the prescriptive period for recovery of a bonus commenced on the date specified by the parties that the bonus would be due pursuant to a bonus agreement). Here, the defendant's policies dictated when Mr. Petagna could demand payment of the commissions, i.e., the date that the orders were completed, invoiced, and shipped. Therefore, the prescriptive period begins to run for each claim on the date that the order was so completed. Nevertheless, the date that each order was completed, shipped and invoiced is a question of fact that can only be determined after examining the evidence presented by both parties.
Plaintiff argues that his Statement of Uncontested Facts provides sufficient factual basis to find that none of Mr. Petagna's claims for commissions have prescribed. However, The Statement of Uncontested Facts does not give the dates that each claim was sufficiently completed so that Mr. Petagna could have demanded payment under Hiller's policy.
Plaintiff has moved this Court for dismissal of defendant's counterclaim which seeks a declaratory judgment holding that any claim for commissions for orders booked prior to April 17, 1997 would have prescribed. The Court agrees with the plaintiff that this counterclaim should be dismissed because the relevant date is the date that the orders where completed, invoiced and shipped, not the date they were booked.
IV. CONCLUSION
Accordingly, the Court finds that plaintiffs motion seeking dismissal of defendant's counterclaim for declaratory relief is GRANTED. Plaintiffs motion for summary judgment on the issue of prescription is DENIED because factual questions remain as to the date that each order Mr. Petagna is seeking commission for was sufficiently completed so that he could have demanded his commission.
New Orleans, Louisiana, this 12 day of September, 2000.