918 F.2d 955 (4th Cir. 1990), 89-2688, Buie v. System Automation Corp.

Docket Nº:89-2688, 89-2786.
Citation:918 F.2d 955
Party Name:John V.W. BUIE, Barbara Bleiweis, Plaintiffs-Appellees, v. SYSTEM AUTOMATION CORPORATION, Defendant-Appellant,and Alfred Rubin, Defendant. John V.W. BUIE, Barbara Bleiweis, Plaintiffs-Appellants, v. SYSTEM AUTOMATION CORPORATION, Alfred Rubin, Defendants-Appellees.
Case Date:November 21, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
FREE EXCERPT

Page 955

918 F.2d 955 (4th Cir. 1990)

John V.W. BUIE, Barbara Bleiweis, Plaintiffs-Appellees,

v.

SYSTEM AUTOMATION CORPORATION, Defendant-Appellant,and

Alfred Rubin, Defendant.

John V.W. BUIE, Barbara Bleiweis, Plaintiffs-Appellants,

v.

SYSTEM AUTOMATION CORPORATION, Alfred Rubin, Defendants-Appellees.

Nos. 89-2688, 89-2786.

United States Court of Appeals, Fourth Circuit

November 21, 1990

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA4 Rule 36 regarding use of unpublished opinions)

Argued April 5, 1990.

As Amended Dec. 6, 1990.

Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria. James C. Cacheris, District Judge. (CA-88-1063-A)

Nathan Lewin, Miller, Cassidy, Larroca & Lewin, Washington, D.C., (argued) for appellants:

Douglas F. Curtis, Miller, Cassidy, Larroca & Lewin, Washington, D.C., Edward J. Tolchin, Ginsburg, Feldman and Bress, Chartered, Washington, D.C., on brief.

David H. Shapiro, Kator, Scott & Heller, Washington, D.C., (argued) for appellee: Amy E. Wind, Kator, Scott & Heller, Washington, D.C., on brief.

E.D.Va.

AFFIRMED IN PART AND REVERSED IN PART.

Before ERVIN, Chief Judge, PHILLIPS, Circuit Judge, and GARBIS, United States District Judge for the District of Maryland, Sitting by Designation.

GARBIS, District Judge:

Plaintiffs John V.W. Buie and Barbara Bleiweis, employees of defendant System Automation Corporation ("S.A."), sued S.A. and its president, Alfred Rubin, for fraud and breach of contract arising from S.A.'s failure to pay the sales commissions to which they allege they are entitled under S.A.'s Sales Compensation Plan. The district court granted summary judgment in favor of defendant Rubin, and it directed a verdict against plaintiff Bleiweis. The jury returned a verdict in favor of Buie and against S.A., the only two parties remaining at the end. Both sides appeal.

Statement of the Case

S.A. is a privately-held, high-technology company that provides sophisticated computer software and system development services to government and commercial clients. In the spring of 1986, in an effort to boost lagging sales, S.A. hired a Director of Marketing, Joseph Hasuly, who was instructed to hire sales representatives who could expand S.A.'s share of the market and develop new business opportunities for the company. In conjunction with that effort, Buie was offered a position as a Sales Representative on July 1, 1986. Bleiweis was offered a Sales Representative position on July 10, 1986.

As compensation, Buie and Bleiweis were to receive a base salary ($45,000 per year for Buie and $36,000 for Bleiweis), and they would be eligible for bonuses and commissions as outlined in S.A.'s Sales Compensation Plan. A 12-page document outlining the job descriptions and bonus incentives for sales positions within S.A., the Sales Compensation Plan (the "Plan") contains the contractual provisions on which this suit is based.

The Plan defines two categories of sales employees. A "Sales Representative" is defined as a "[d]esignated SA Representative whose primary focus and responsibility is the identification and development of new business." Joint Appendix ["J.A."] 62. An "Account Representative" is defined as a "[d]esignated SA Representative whose primary focus and responsibility is the growth and expansion of current customer business and is a participant in the [Plan]." J.A. 61. It is undisputed that the two plaintiffs were hired as Sales Representatives. J.A. 72-73.

These categories of employees are important because they are compensated in different ways. For a Sales Representative,

An incentive of 2% of contract revenue will be payable for contract awards listed on the Representative's most current PAF and awarded after the implementation of this plan. An incentive of 3% of the contract value will be paid for a contract with a New Client, with the remaining option years paid at a 2% rate.

J.A. 68. In contrast, for an Account Representative,

An incentive of 0.5% of contract revenue for Continuing Follow-on and Recompete business will be payable for awards listed on the Account Representative's most current PAF. An incentive of 2% of contract revenue will be paid for New Business as defined on the Account Representative's most current PAF. An incentive of 3% of the contract value will be paid for a contract with a New Client with the remaining option years paid at a 2% rate.

[1 Thus, the lowest commission level indicated for a Sales Representative is 2%, while the lowest level indicated for an Account Representative is 0.5%.

In negotiations leading to his employment at S.A., Buie was told that he would be concentrating on a particular project known as "Keystone." Though S.A. had worked on aspects of the project for many years, Buie was told that it was being competitively bid for the first time. J.A. 452. Buie was told that S.A.'s future was at risk if the company did not win the Keystone contract. J.A. 452. Buie also was to work on Project 80-X, in which S.A. was to service a portion of Electronic Data Systems' prime contract with the federal government. Buie began working at S.A. in July 1986.

On September 18, 1987, S.A. learned that it had won the Keystone contract, although the contract was not officially signed until September 11. J.A. 477-80. In late August 1987, Buie learned he would receive a commission of only 0.5% on Keystone. Buie disputed that decision, but in mid-September Rubin told Buie he would stand by his original interpretation of the Plan. J.A. 471. Rubin stated that Keystone was only a "recompete" project under the Plan and that on that project Buie was doing "Account Representative" work. Therefore, he would receive the Account Representative commission of 0.5%. J.A. 472. Buie again wrote Rubin a long memo, asking him to reconsider his interpretation of the Plan, but Rubin responded that Buie would be "paid at the account rep rate." J.A. 476.

In pursuing his claim for a higher commission, Buie argued his case to Rubin, the president of S.A. and owner of 92% of the company's stock, J.A. 510, because the Plan gives him the power to interpret it and resolve disputes. The Plan indicates:

The President of SA shall have final authority to interpret this [Plan] and to resolve any dispute concerning its administration or any payments due to any Representative.

J.A. 60. In addition, Rubin also had the power to modify the contents of the Plan at any time. The Plan states that it

may be modified, suspended, or discontinued at any time by the President of SA or the Administrator. Any such changes shall apply to all participants who are covered by this [Plan].... SA reserves the right to ... [m]ake any adjustments or revision to incentive objectives, incentive payments, salaries, draws, bonuses, program or contract assignments, or any other relevant matters affecting the Representative's employment.

J.A. 60. Thus, in "interpreting" the Plan in the course of "resolving any disputes," Rubin also had the power under the Plan to "modify," "suspend," or "discontinue" it "at any time."

SA received the Keystone contract in September 1987, and the contract was valued in excess of $3 million. Buie was paid commissions at the rate of 0.5%. Project 80-X was awarded to S.A. in early December 1987, and both sides had signed the contract by December 17, 1987. Buie was paid no commissions on Project 80-X, and he never received a 2% commission on Keystone. J.A. 497-98.

On December 7, 1987, Buie was informed S.A. was having severe financial problems and that he would be fired. On December 21, 1987, Buie was fired. J.A. 128. Buie asked to be paid the commissions he had earned on these projects, and he asserted that he should be paid these commissions even after he was fired. Rubin rejected this request, arguing that the Plan did not provide for post-termination commissions. The Plan provides:

If a representative terminates employment with SA for any reason other than [illness, disability, retirement or death], all incentive compensation awards earned but not paid prior to termination shall be forfeited. This includes any deferred payments of revenue incentive. SA shall have no further liability to the Representative nor accept any claims for incentive payments for future bookings, contract and/or modifications thereto, regardless of responsibilities prior to termination.

J.A. 65. Based on his interpretation that this passage did not provide for post-termination commissions, Rubin did not pay any commissions to Buie after he was fired.

Bleiweis began working at S.A. in July 1986. In January and June 1987, Bleiweis was assigned to work on two existing S.A. accounts, one with the Corps...

To continue reading

FREE SIGN UP