Church v. Home Fashions Int'l, LLC
| Decision Date | 19 July 2012 |
| Docket Number | Civil Action No. 5:10–CV–133–DCK. |
| Citation | 879 F.Supp.2d 498 |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | Ken E. CHURCH and Ken E. Church Enterprises, LLC, Plaintiffs, v. HOME FASHIONS INTERNATIONAL, LLC, Defendant. |
OPINION TEXT STARTS HERE
Paul Everett Culpepper, Young, Morphis, Bach & Taylor, L.L.P., Hickory, NC, for Plaintiffs.
Harvey R. Poe, Starr, Gern, Davison & Rubin, P.C., Roseland, NJ, Matthew Kyle Rogers, Hickory, NC, for Defendant.
THIS MATTER IS BEFORE THE COURT on Defendant's “Notice Of Motion [For Summary Judgment]” (Document No. 27) and “Plaintiffs' Motion For Summary Judgment” (Document No. 28). The parties have consented to Magistrate Judge jurisdiction pursuant to 28 U.S.C. § 636(c), and these motions are now ripe for disposition. Having carefully considered the motions, the record, and applicable authority, the undersigned will deny Defendant's motion, and grant in part and deny in part Plaintiffs' motion.
Ken E. Church (“Plaintiff” or “Church”) was hired by Home Fashions International, LLC (“Defendant” or “HFI”) in January 2008 as “a contract agent tied exclusively to” Westgate Home Fashions (“WHF”), a trade name of Defendant, an affiliate of American Decorative Fabrics, LLC (“ADF”). (Document Nos. 2–1, 27–1, 28–1). Specifically, Tom Carter (“Carter”) a representative of ADF, and president of WHF, recruited Plaintiff and confirmed the terms of Plaintiff's employment in an email dated January 17, 2008 (the “Agreement”). (Document No. 27–1, p. 1; Document No. 28–1, p. 20). The email from Carter with a subject line of “Agreement with ADF” included the following:
My sincerest apologies for not getting this in writing to you sooner.... I have outlined below the agreement for your records.
Short–Term Compensation guarantee of 10,000.00 per month for a period of 18 months.
Additional health insurance/disability payment of 12,000 annually to be paid 1,000.00 per month for 18 months. You will receive a check once a month for 11,000.00.
All expenses are to be covered by ADF including travel miles (excluding travel from home to office)
...
An office (when we lease/purchase building) will be supplied to you by ADF
Your role would be that of a contract agent tied exclusively to WHF in charge of sales and key account management.
You would manage additional sales representation and or key-account executives.
You would be responsible for the compensation of any support personnel you would need in order to run your sales organization. (i.e. assistant, etc.)
We would confer and agree on any support personnel decisions.
As discussed, you will be heavily involved in all product decisions, company direction, marketing efforts, etc.
Commissions will be based on profitability of the items sold. Commissions should range from 2% to 5% based on gross margin.
You will receive an over-ride ranging from .5% to 1% for any “key account executives” you hire based on the profitability of the account.
The profitability of the account is based on the average gross margin of the units sold and can be adjusted based on fluctuations in product assortment.
In addition, an article in Furniture Today, dated March 24, 2008, provided in pertinent part that “David Li, owner and CEO of HFI, a $160 million company based in Shanghai, has named Tom Carter president of Westgate and has hired industry veteran Ken Church to head sales, marketing and customer relations for the upholstery line.” (Document No. 28–1, p. 20). David Li (“Li”)was quoted as saying “I'm very excited to have Carter and Church launch and lead my furniture business....” Id. On April 30, 2012, the parties filed “Stipulations” (Document No. 23) which included a statement affirming the parties' January 2008 employment agreement: (Document No. 23, p. 1).
Soon after being hired, and pursuant to the recommendation of Carter, Plaintiff set up Ken E. Church Enterprises, LLC. (Document No. 27–2, p. 17; Document No. 28–2, p. 6). The parties have stipulated that Plaintiff assigned his right for payment of any and all compensation to Ken E. Church Enterprises, LLC, without objection from Defendant, and that Ken E. Church Enterprises, LLC was properly joined to this lawsuit with Defendant's consent. (Document No. 23, p. 1).
Plaintiff anticipated that he would be helping in all areas of Westgate's furniture division and would take instructions from Carter and Li, or other upper management employees with HFI. (Document No. 29, p. 2; Document No. 28–2, p. 2). Apparently, Carter indicated to Plaintiff that he would lead the sales, marketing and customer relations divisions of HFI, and that Carter would depend on him for advice and assistance in all areas of manufacturing and furniture sales. (Document No. 29, p. 2; Document No. 28–2, pp. 1–3).
During the first 11–12 months of his employment with HFI, Plaintiff reported to Carter and saw him almost daily in an office provided by Carter in downtown Hickory, North Carolina. (Document No. 27–2, p. 15; Document No. 28–2, p. 6). Carter acknowledges in his testimony that Plaintiff worked in Hickory for HFI, and that he worked with him there for a time. (Document No. 28–1, p. 10). Carter could not exactly recall how often Church was in the Hickory office, but suggested it was weekly. Id.
Plaintiff had to have his travel approved by Carter, and pursuant to the Agreement he would have to “confer and agree on any support personnel decisions.” (Document No. 27–2, p. 16; Document No. 28–1, p. 19; Document No. 28–2, p. 14). Plaintiff contends in his affidavit, and Defendant has failed to refute, that he participated in a wide variety of duties and responsibilities unrelated to sales, all under Carter's direction. (Document No. 28–2, pp. 3–5; Document No. 29, p. 3).
According to Defendant, “[t]he Agreement remained in effect for 12 months, during which time, Defendant paid the foregoing $11,000 per month to Church LLC, except for the initial payment in the amount of $11,000 that was paid to Church, and reimbursed Church LLC for all of the travel expenses of Church as submitted and approved by Defendant.” (Document No. 27–1, p. 2; see also, Document No. 27–2, pp. 25–26). In December 2008, Carter informed Plaintiff that Defendant intended to terminate Plaintiff, and/or at some point soon thereafter told him that there would be a new agreement that would supersede the parties' original Agreement. (Document No. 29, p. 4; Document No. 28–2, p. 5; Document No. 27–2, p. 22).
Plaintiff has consistently asserted in his briefs, affidavits, and deposition testimony that he never received a proposal to change the terms of the Agreement and never agreed to change his compensation. (Document No. 29, p. 4; Document No. 27–2, p. 22; Document No. 28–2, p. 5; Document No. 30, p. 1). Plaintiff states in his most recent affidavit that he “was never terminated by the Defendant or advised, either verbally or in writing, my compensation was changed.” (Document No. 30, p. 1). Defendant's motion for summary judgment contends that “[e]ffective January 1, 2009, Church and Defendant orally changed the Agreement by eliminating the guaranteed monthly amount of $10,000, by eliminating the monthly amount of $1,000 for medical/disability and agreeing to compensate Church on a commission basis only.” (Document No. 27–1, pp. 2–3). However, Defendant has offered no factual support for its contention that the parties “orally changed the Agreement.” Id.
In or about January 2009, Carter's duties and responsibilities with HFI changed and he was ultimately terminated. (Document No. 29, p. 4; Document No. 28–2, p. 5). Plaintiff, however, continued to work for Defendant under the instruction and supervision of Jean Brown (“Brown”), who worked for HFI for over four years. Id. Brown was HFI's Chief Operating Officer, and worked on a daily basis with Plaintiff. (Document No. 28–4). She “assumed he was an employee for HFI and not an independent contractor” and “treated him like a management level employee.” Id. While working with Brown, Plaintiff's duties and responsibilities “included a wide variety of management level responsibilities that were more than sales and marketing related duties.” Id. “During the approximate 6 months [Brown] worked with Ken Church on a full time basis, [she] was aware he was not being paid the guaranteed salary that HFI agreed to pay him” and she “attempted on several occasions to get him paid, but [she] was unsuccessful.” Id.
On or about July 7, 2009, after 18 months working with Defendant, Plaintiff became Chief Operating Officer of the Lake Hickory Country Club. (Document No. 29, p. 5; Document No. 27–2, p. 32; Document No. 28–2, pp. 5–6). Plaintiff continued some sales duties and responsibilities related to the furniture division up until the spring market of 2010, when he terminated his involvement with HFI. (Document No. 29, p. 5; Document No. 28–2, pp. 6). Defendant contends that it paid all of the commissions earned by Plaintiff to Church LLC through February 2010, and that its furniture manufacturing business was soon thereafter terminated. (Document No. 27–1, p. 3).
Plaintiff filed his “Complaint” (Document No. 2–1) against Defendant on August 11, 2010, in the Superior Court of Caldwell County, North Carolina. The Complaint asserts causes of action for breach of contract and violation of the North Carolina Wage and Hour Act, N.C.Gen.Stat. § 95–25.1 et seq. (Document No. 2–1). Defendant filed a “Notice Of Removal” (Document No. 2) with this Court on September 9,...
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