Opinion
No. C6-01-714.
Filed December 18, 2001.
Appeal from the District Court, Hennepin County, File No. 9911906.
William L. Lucas, William L. Lucas, PA., (for appellant),
William J. Maddix, Dylan J. McFarland, Burstein, Hertogs McFarland, P.A., (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant, who recovered $127,595.80 in previously unpaid commissions (offset by earlier payments), contends that she is entitled to a doubling of the award under Minn. Stat. § 181.145 (2000). Appellant also disputes the offset determined by the trial court, and respondent seeks relief from the entire award. Because we find merit in appellant's complaint concerning the offset but no other reversible error, we affirm with modification the trial court's order.
FACTS
From 1979 to 2000, appellant Kathleen Stuart was a sales representative for respondent Midwest/Northern, Inc. In 1987, the parties entered into a written contract giving appellant an exclusive sales territory and "commissions for all sales" within that territory, "including sales that result without [her] help." The contract contained a merger clause stating that it "represents the entire agreement between parties hereto and any representation, oral or otherwise, not contained herein [is] null and void."
In May 1999, appellant sued respondent (1) for unpaid commissions for sales within her territory; and (2) for violating Minn. Stat. § 181.145 (2000) by failing to pay her the commissions within the period required by the statute. Appellant sought $127,595.80 in total unpaid commissions. The trial court held that respondent owed appellant the unpaid commissions from all sales made within her territory, but it permitted respondent to deduct $22,568.25 in commissions already paid for sales that appellant made outside her territory. The court refused to grant appellant a penalty under Minn. Stat. § 181.145, subd. 3, but did award appellant $49,345 in attorney fees and $1,606.15 in costs.
DECISION 1.
Respondent argues that an implied contract based on an alternate course of dealing superseded the parties' written contract or that appellant waived the contract provisions. A written contract may be modified after its execution by the acts and conduct of the parties in the same manner as a contract may be entered into in the first place. Wolpert v. Foster, 254 N.W.2d 348, 352 (Minn. 1977). And parties may waive contract provisions by ignoring them and acting as if they had no application. Edelstein v. Duluth M I. R. Ry. Co., 31 N.W.2d 465, 467 (Minn. 1948). Whether a contract exists is generally an issue for the factfinder. Morrisette v. Harrison Int'l Corp., 486 N.W.2d 424, 427 (Minn. 1992). But when the writing can wholly determine the parties' intention, the construction of an instrument is a question of law for this court to review de novo. Wolfson v. City of St. Paul, 535 N.W.2d 384, 386 (Minn.App. 1995).
The record permits no determination of an implied contract, course of dealing, or waiver that vitiated the parties' clear and unambiguous written contract. Respondent argues that appellant never received commissions from sales made in her territory by other sales representatives before signing the contract and that after the contract appellant continued to forego those commissions. But the record supports the trial court's finding that the parties followed the written contract. For example, respondent paid appellant for certain sales made by others that appellant discovered in her territory. And when appellant asked about other unpaid commissions respondent told her that they were "in collections." Finally, appellant did not waive any contract rights because she appropriately demanded an accounting once she learned of respondent's failure to pay her all commissions from sales made within her territory.
2.
Appellant contends that the trial court erred in permitting respondent to offset the $127,595.80 in unpaid commissions by $22,568.25 in commissions it paid her for sales that she made outside her territory. The court concluded that respondent's practice of paying appellant commissions on sales made outside of her territory "was not provided for in the controlling written Agreement and is therefore `null and void' according to the merger clause." But those commissions that respondent already paid appellant constitute a completed contract.
An entirely separate and distinct contract is not superseded by a later contract, even one that contains an integration clause. Accordingly, while a written contract merges into itself all prior parol negotiations with reference to that contract, it does not necessarily merge all other contracts actually entered into between the parties.
17A C.J.S. Contracts § 417 (1999). Because the commissions appellant received from sales made outside her territory were the product of a separate contract, we reverse the trial court's conclusion that respondent may deduct the amount of the previously paid commissions from the unpaid amount.
3.
Appellant argues that she should receive a penalty award under Minn. Stat. § 181.145, subd. 2(a) (2000), which, in the circumstances of this case, would equal the amount of her unpaid commissions. If a statute, construed according to ordinary rules of grammar, is unambiguous, a court may engage in no further statutory construction and must apply its plain meaning. State by Beaulieu v. RSJ, Inc., 552 N.W.2d 695, 701 (Minn. 1996). Penalty provisions must be strictly construed. Chatfield v. Henderson, 252 Minn. 404, 410, 90 N.W.2d 227, 232 (1958) (reading Minn. Stat. §§ 181.13 and 181.14 together and concluding that their penalizing nature requires strict construction). Application of a statute to the undisputed facts of a case involves a question of law, and the trial court's decision is not binding on this court. O'Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn. 1996).
When a commission-based salesperson resigns, "the employer shall promptly pay the salesperson * * * commissions earned through the last day of employment or be liable to the salesperson for the penalty provided under subdivision 3."
Appellant contends that "commissions earned," as used in the penalty provision, permits her to recover the statutory penalty for the unpaid commissions owed to her under the contract. In this case, a calculation and award of the claimed penalties would double appellants recovery of $127,595.80. The trial court reasoned that the plain meaning of "earn" is "to acquire by labor, service, or performance," and because appellant did not "earn" the unpaid commissions, she should not receive the statutory penalty. The trial court's interpretation of the penalty provision correctly takes into account the mandate that we employ words in their ordinary sense. "Commissions earned" does not mean all the money that appellant's contract promised her. In fact, the statute does not purport to cover many of the various types of compensation a contract could offer, such as stock options, bonuses, or other benefits. Rather, as the trial court stated, "commissions earned" represents the amount promised to employees for their personal efforts in making sales.
Moreover, appellant's interpretation would impose an unfair burden on respondent. In ascertaining legislative intent, courts presume that the legislature did not intend results that are "absurd, impossible of execution, or unreasonable." Minn. Stat. § 645.17(1) (2000). Awarding appellant the statutory penalty would amount to respondent having paid three times the amount of the unpaid commissions — twice to appellant and once to those who actually made the sales. The penalty provision does not intend such inequitable results, at least when respondent reasonably disputed the unpaid commissions and has already paid the commissions to others. See, e.g., Otis v. Mattila, 281 Minn. 187, 188, 160 N.W.2d 691, 693 (1968) (finding that the penalty of Minn. Stat. § 181.14 is inapplicable and unintended by the legislature when the imposition of liquidated damages under the Fair Labor Standards Act already equals the amount of the penalty due).
Other jurisdictions refuse to award a statutory penalty when the employer reasonably disputes the unpaid wages. See, e.g., Bradshaw v. Jayco Enter., 510 P.2d 174, 175 (Kan. 1973) ("harsh and unjust" to award a penalty when there is a legitimate controversy or honest dispute over whether the term "wages" in a contract includes vacation pay); Sensat v. City of Lake Charles, 607 So.2d 1069, 1072 (La.App. 3 Cir. 1992) (no penalty when bona fide dispute); Chatterley v. Omnico, Inc., 485 P.2d 667, 670 (Utah 1971) (when bona fide dispute as to whether wages due, trial court not obliged to grant statutory penalty award).
Further, appellant has offered no authority suggesting that the penalty determination is absolute and not subject to trial court discretion. Other penalizing statutes, such as Minn.R.Civ.P. 11, use the word "shall" and yet are subject to trial court discretion. Conant v. Robins, Kaplan, Miller Ciresi, L.L.P., 603 N.W.2d 143 (Minn.App. 1999). Given the unique circumstances in this case, no statutory penalty is warranted.
Similarly, a trial court's determination of reasonable attorney fees and costs will not be upset absent an abuse of discretion. Minnesota Council of Dog Clubs v. City of Minneapolis, 540 N.W.2d 903, 904 (Minn.App. 1995). Appellant requested a doubling of her attorney fees as well as full costs. But because appellant based her claim for fees on receiving a penalty award, there was no error in the trial court's award of fees. And appellant's dispute on costs rests on the trial court's decision to base the award on the record, without soliciting additional documentation appellant had not furnished; the court's judgment in this respect was well within the breadth of its discretion in dealing with the requested award.