Arndt v. First Union Nat. Bank, COA04-807.

Decision Date07 June 2005
Docket NumberNo. COA04-807.,COA04-807.
Citation613 S.E.2d 274
CourtNorth Carolina Supreme Court
PartiesDonald ARNDT, Plaintiff, v. FIRST UNION NATIONAL BANK, First Union Corporation and Wachovia Corporation, Defendants.

Robert M. Elliot and J. Griffin Morgan, for plaintiff-appellee.

Robinson, Bradshaw & Hinson, P.A., by Charles E. Johnson and Daniel F. Basnight, for defendants-appellants.

TYSON, Judge.

First Union National Bank ("First Union"), First Union Corporation, and Wachovia Corporation ("Wachovia") (collectively, "defendants") appeal the trial court's orders and judgment filed 31 October 2003 finding: (1) Donald Arndt ("plaintiff") and First Union entered into a contract where First Union would pay plaintiff an annual bonus; (2) First Union modified plaintiff's bonus formula without his consent; (3) First Union breached its contract with plaintiff concerning his bonus formula; (4) First Union failed to give plaintiff notice of the change in the bonus formula; and (5) Wachovia owes plaintiff $837,243.40 plus interest and costs. We find no error.

I. Background

Plaintiff worked as a senior vice president in the "Structured Products Group" for First Union from 3 June 1996 to 9 February 2001. Plaintiff's initial compensation was $90,000.00 per year in salary plus a "guaranteed minimum incentive payment of $90,000.00." After starting employment, plaintiff and Brian Simpson ("Simpson"), manager of the Structured Products Group, orally agreed plaintiff would be paid twenty percent of all net income he earned for First Union. The formula to compute the bonus was not discussed. In 1996, 1997, and 1998, plaintiff was paid twenty percent of the income he generated for First Union.

In 1998, First Union decided to change its bonus formula to a more "subjective" determination. Despite this change, plaintiff's bonus for year 1999 remained at twenty percent of the net income he produced for First Union. However, plaintiff's bonus for year 2000 fell to roughly ten percent, half of the usual amount. Simpson contended the decrease was due to a financial loss First Union suffered on a project upon which plaintiff was working on, and his poor ratings in "teamwork ... leadership... [and] inability to work well with others."

Plaintiff contacted Deidre Bradshaw ("Bradshaw") in First Union's Human Resources Department, to discuss the decrease in his compensation. When it became apparent that First Union would not pay plaintiff according to the prior bonus structure, plaintiff informed Bradshaw that he would seek "appropriate remedies."

Plaintiff filed a complaint against defendants on 12 March 2002 for: (1) breach of contract; (2) violation of the North Carolina Wage and Hour Act ("NCWHA"); and (3) fraud. Defendants answered on 28 May 2002 and simultaneously filed a motion to dismiss the claim for fraud. Plaintiff voluntarily dismissed without prejudice his fraud claim. Throughout the discovery process, Bradshaw "represented the company" as the person on "point" and assisted defendants' counsel in responding to discovery requests.

The case was tried by jury from 22 to 26 September 2003 and 29 September to 1 October 2003. The jury found: (1) plaintiff and First Union entered into a contract where First Union would pay plaintiff an annual bonus; (2) First Union modified plaintiff's bonus formula without his consent; (3) First Union breached its contract with plaintiff concerning payment of his bonus compensation; (4) First Union failed to give plaintiff notice of the change in the bonus formula; and (5) Wachovia owes plaintiff $837,243.40 plus interest and costs.

Plaintiff moved the trial court for liquidated damages, attorneys' fees, costs, and interest. Defendants moved the trial court for judgment notwithstanding the verdict or new trial. The trial court ordered: (1) "Wachovia shall pay to Plaintiff the amount of $837,243.40 in liquidated damages;" (2) "Plaintiff shall recover interest on the amount awarded by jury in its verdict at the rate of 8% per annum from February 15, 2001, until the Judgment is satisfied;" and (3) "Wachovia shall pay to Plaintiff the amount of $5,377.31 in costs." The trial court denied plaintiff's motion for attorneys' fees and defendants' motion for judgment notwithstanding the verdict or new trial. Defendants appeal.

II. Issues

Defendants argue the trial court erred in: (1) denying defendants' motion for directed verdict and judgment notwithstanding the verdict or new trial; (2) its instructions to the jury; and (3) abusing its discretion in awarding plaintiff liquidated damages.

III. Directed Verdict and Judgment Notwithstanding the Verdict

Defendants argue the trial court erred in denying its motions for directed verdict and judgment notwithstanding the verdict after plaintiff failed to offer sufficient evidence to establish: (1) an enforceable contract or subsequent breach; and (2) a violation of the NCWHA. We disagree.

A. Standard of Review

Our Supreme Court has set forth the standard of review of a trial court's ruling on motions for a directed verdict and judgment notwithstanding the verdict.

The standard of review of directed verdict is whether the evidence, taken in the light most favorable to the non-moving party, is sufficient as a matter of law to be submitted to the jury. When determining the correctness of the denial for directed verdict or judgment notwithstanding the verdict, the question is whether there is sufficient evidence to sustain a jury verdict in the non-moving party's favor, or to present a question for the jury. Where the motion for judgment notwithstanding the verdict is a motion that judgment be entered in accordance with the movant's earlier motion for directed verdict, this Court has required the use of the same standard of sufficiency of evidence in reviewing both motions.

Davis v. Dennis Lilly Co., 330 N.C. 314, 322-23, 411 S.E.2d 133, 138 (1991) (internal citations and quotations omitted) (emphasis supplied).

B. Analysis
1. Breach of Contract

In Overall Co. v. Holmes, our Supreme Court stated, "[a] contract is `an agreement, upon sufficient consideration, to do or not to do a particular thing.'" 186 N.C. 428, 431, 119 S.E. 817, 818 (1923). The contract may be "express or implied, executed or executory, [and] results from the concurrence of minds of two or more persons ... [I]ts legal consequences are not dependent upon the impressions or understandings of one alone of the parties to it. It is not what either thinks, but what both agree." Id. at 431-32, 119 S.E. at 818-19 (quoting Prince v. McRae, 84 N.C. 674 (1881)). "In the construction of a contract, the parties' intentions control, Cordaro v. Singleton, 31 N.C.App. 476, 229 S.E.2d 707 (1976)[,] and their intentions may be discerned from both their writings and actions." Walker v. Goodson Farms, Inc., 90 N.C.App. 478, 486, 369 S.E.2d 122, 126 (1988) (citing Bank v. Supply Co., 226 N.C. 416, 38 S.E.2d 503 (1946); Zinn v. Walker, 87 N.C.App. 325, 361 S.E.2d 314 (1987); Heater v. Heater, 53 N.C.App. 101, 280 S.E.2d 19 (1981)), disc. rev. denied, 323 N.C. 370, 373 S.E.2d 556 (1988).

Plaintiff offered evidence that: (1) when initially hired, he and Simpson orally agreed that plaintiff would receive twenty percent of the Structured Product Group's net income; (2) the agreement did not include an expiration date; (3) this agreement was separate from incentive plans offered to other employees; (4) defendants paid plaintiff's bonuses from 1997 to 1999 according to the terms of the agreement; (5) at no time did defendants modify the agreement, orally or in writing; and (6) defendants breached this agreement by retroactively reducing plaintiff's year 2000 bonus. This evidence was presented to the jury through plaintiff's testimony and exhibits, including email correspondence between plaintiff and Simpson.

Plaintiff contends that the oral agreement with Simpson and the subsequent performance by defendants was evidence that "by both their words and actions the parties ... had reached a `meeting of the minds.'" Fulk v. Piedmont Music Center, 138 N.C.App. 425, 430, 531 S.E.2d 476, 480 (2000) (citation omitted). Defendants argue the "sketchy" discussions between plaintiff and Simpson did not comprise a valid contract, and they assert plaintiff failed to show the parties agreed to the terms of the contract. Defendants also argue that if a contract existed between plaintiff and Simpson, it expired at the end of 1997 and was not perpetual. Defendants assert the true contract defining plaintiff's compensation was the annual Incentive Compensation Program ("ICP") which began and ended each calendar year. As an at-will employee, defendants contend plaintiff accepted the terms of this agreement by not "quitting."

The evidence presented by both parties creates an issue of fact concerning the existence of a contract. Whether a contract existed is a question for the jury. See Goeckel v. Stokely, 236 N.C. 604, 607, 73 S.E.2d 618, 620 (1952) (issues of fact concerning terms of a contract are for the jury to consider). Based upon plaintiff's testimony, as corroborated by the emails and the twenty percent bonuses defendants paid and plaintiff received in 1997, 1998, and 1999, a jury could find that the parties reached a clear and definite agreement regarding the details of the contract. See Walker, 90 N.C.App. at 486, 369 S.E.2d at 126 (the parties intentions may be shown through their agreement and subsequent actions).

Conflicts in the evidence are to be resolved in plaintiff's favor, and he "must be given the benefit of every inference reasonably to be drawn in his favor." Williams v. Jones, 322 N.C. 42, 48, 366 S.E.2d 433, 437 (1988) (citing Daughtry v. Turnage, 295 N.C. 543, 246 S.E.2d 788 (1978) (conflicts, contradictions, and...

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