Cousineau v. Norstan, Inc.

• Decision Date: 06 March 2003
• Docket Number: No. 01-3505.,01-3505.
• Citation: 322 F.3d 493
• Parties: Donald G. COUSINEAU, Appellee, v. NORSTAN, INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

322 F.3d 493

Donald G. COUSINEAU, Appellee, v. NORSTAN, INC., Appellant.

No. 01-3505.

United States Court of Appeals, Eighth Circuit.

Submitted: October 9, 2002.

Filed: March 6, 2003.

Patricia A. Bloodgood, argued, Minneapolis, MN (Martin A. Carlson, on the brief), for appellant.

James H. Kaster, argued, Minneapolis, MN (Nicholas G.B. May, on the brief), for appellee.

Before McMILLIAN, LAY, and RILEY, Circuit Judges.

RILEY, Circuit Judge.

Norstan, Inc. (Norstan) appeals the district court's¹ grant of summary judgment in favor of Donald G. Cousineau (Cousineau). Cousineau sought damages from Norstan relating to a dispute over sales commissions. Norstan contractually agreed to pay Cousineau twenty-five percent of the gross margin on all "guaranteed revenue" from the equipment and service outsourcing contracts Cousineau negotiated for Norstan. Norstan argues two of the three sales contracts Cousineau negotiated had lower "guaranteed revenue" than asserted by Cousineau, thereby reducing the commissions owed to Cousineau. We disagree and affirm.

I. BACKGROUND

Norstan provides telecommunication equipment and consulting and management services. Cousineau marketed outsourcing contracts for Norstan's services. In 1997, Cousineau transferred from Norstan's Montreal, Quebec, office to its Plymouth, Minnesota office. Cousineau's title became Director of Strategic Alliances; however, he continued to focus exclusively on selling outsourcing contracts. At that time, the parties negotiated a new contract (Letter Agreement) dated July 25, 1997, providing that Cousineau would receive twenty-five percent of the gross margin on all "guaranteed revenue" for the initial term of the outsourcing contracts he negotiated for Norstan. The Letter Agreement further provides that any changes made to the outsourcing contracts within ninety days of execution are included in the final commission calculation.

Cousineau negotiated three outsourcing contracts before leaving Norstan. Cousineau alleged Norstan breached the Letter Agreement by failing to pay him all the commissions owed on two of the contracts: (1) the Grandview contract, and (2) the AmerUs contract. Cousineau filed claims for breach of contract, unjust enrichment, and failure to pay wages promptly in violation of Minn. Stat. § 181.14 (1998). Norstan counterclaimed, contending Cousineau was overpaid and had misrepresented the commissions and information to both Grandview and AmerUs. Specifically, Norstan alleged fraud, fraudulent concealment, negligent misrepresentation, breach of fiduciary duty, unjust enrichment, and breach of contract.

The district court granted Cousineau summary judgment on his breach of contract and section 181.14 claims, while dismissing Cousineau's unjust enrichment claim and Norstan's counterclaims. The district court awarded Cousineau $699,817.85, which included unpaid commissions, prejudgment interest, penalties, attorney fees and costs.

On appeal, Norstan contends the district court erred in granting Cousineau summary judgment because (1) a modification to the Grandview contract reduced the amount of commissions owed, and (2) the AmerUs contract did not contain a required minimum number of long distance minutes, which reduced the commissions sought by Cousineau. Norstan also argues the district court erred in dismissing Norstan's counterclaims and in awarding Cousineau prejudgment interest, penalties, attorney fees and costs.

II. DISCUSSION

We review the grant or denial of summary judgment de novo. See Calder v. TCI Cablevision of Mo., Inc., 298 F.3d 723, 728 (8th Cir.2002). "Summary judgment is proper where the evidence, when viewed in the light most favorable to the nonmoving party, indicates that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law." Id.; Fed.R.Civ.P. 56(c).

A. Grandview Contract

Over the course of several months, Cousineau negotiated a contract with Grandview for telecommunication services and equipment. The primary contact person from Grandview with whom he negotiated was Martina Clemens (Clemens). Clemens was a vice president at Grandview, the sister-in-law of Grandview's president and CEO, and responsible for Grandview's contract negotiations with Norstan. At the conclusion of the negotiations, the contract contained a "termination for convenience" clause, whereby Grandview could terminate the contract at the end of two years, without cause, by giving six months notice. In that event, Grandview would be subject to a specified amount of "stranded costs." Otherwise, the contract contemplated a service agreement for six years.

After executing the contract on June 11, 1998, Cousineau submitted his commission request based on a calculation of the revenue for the full six years of the contract. However, Norstan determined the "guaranteed revenue" based on only two years because of the termination clause. Cousineau then sought and received permission from Norstan to negotiate with Grandview to eliminate the termination clause from the contract. Cousineau talked to Clemens, and Clemens agreed to eliminate the termination clause. On August 13, 1998, Clemens initialed a single redlined page from the contract, which contained the deleted termination clause. On August 25, 1998, Jim Guthrie, Cousineau's supervisor, also initialed the redlined page, after speaking to Clemens, who confirmed she intended to delete the termination clause in exchange for other contract provisions. Norstan suggests Cousineau and Clemens actually negotiated some additional changes at the same time, which never took effect and were not part of the written redlined page. In mid-September 1998, Norstan understood Grandview did not want the two-year termination for convenience clause in the contract. However, by September 24, 1998, Grandview sought to reinstate the termination clause, and Norstan decided that it was "in the best interests of both parties that the clause for convenience be kept in the contract."

Did the August actions constitute an effective modification of the contract for purposes of calculating Cousineau's commissions, as a matter of law? Cousineau argues the redlined page of the contract is unambiguous and the changes speak for themselves; therefore, no extrinsic evidence need be considered. Norstan contends the modification was ineffective because it violated the contract's modification procedure. Cousineau argues an executive from each company responsible for negotiating the contract initialed and dated the appropriate portion of the redlined page, thereby effecting a binding modification. Cousineau further replies that the modification procedure was not utilized, in this instance, because that procedure required use of a committee, which had not yet been formed, and later modifications were made without using a committee.

"We review the district court's interpretation of the contract and the grant of summary judgment de novo. `Unambiguous contract language must be construed according to its plain and ordinary meaning.'" Mapes v. MTR Gaming Group, Inc., 299 F.3d 706, 707 (8th Cir.2002) (citing Minnesota state law) (internal citations omitted). "We review de novo the trial court's determination that the contracts were unambiguous." Winthrop Res. Corp. v. Stanley Works, 259 F.3d 901, 903-04 (8th Cir.2001) (internal citations omitted).

Norstan argues the contract is ambiguous either because the redlined page is itself ambiguous, or it is ambiguous whether the redlined page even belongs in the contract. Norstan contends the parties to the contract—Norstan and Grandview—do not consider that the contract was modified by the redlined page. According to Norstan, the redlined page was merely a single page containing the termination clause and nowhere stated it was a modification to the Norstan-Grandview contract.

Contract interpretation is determined as a matter of law. See Lake Superior Paper Indus. v. Minnesota, 624 N.W.2d 254, 258 (Minn.2001). Contract construction and effect are also questions of law, unless the contract terms are ambiguous. See generally Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn.1998). Ambiguity arises when the language is subject to more than one reasonable interpretation. Id. Finally, whether particular facts amount to modification of a contract is a question of law, while whether such facts are proved is a question of fact. See Brodsky v. Brodsky, 639 N.W.2d 386, 392 (Minn.Ct.App.2002); see also 17A C.J.S. Contracts §§ 407-415 (1999).

"Whether a pre-existing agreement has been modified depends on the parties' objective manifestations, not their subjective understanding." Brodsky, 639 N.W.2d at 392. In this case there is no dispute about the facts.² The parties agree the redlined page is a copy of the page from the contract containing the "termination for convenience" clause. Clemens for Grandview initialed the redlined page, containing a stricken version of the termination clause. Guthrie for Norstan also initialed the page. We agree with the district court that, as a matter of law, the redlined, initialed page constitutes a modification of the contract.

However, "[p]arol evidence may be considered `to explain the circumstances surrounding the execution of the documents.'" Poser v. Abel, 510 N.W.2d 224, 227 (Minn.Ct.App. 1994) (quoting Anderson v. Kammeier, 262 N.W.2d 366, 370 n. 2 (Minn.1977) (contracts in several writings relating to the same transaction will be construed with reference to each other), and citing Doyle v. Wohlrabe, 243 Minn. 107, 66 N.W.2d 757, 762 (1954) (parol evidence explaining time, place, parties, and other circumstances may be received to aid in interpreting contract terms); 2 Arthur L. Corbin, Corbin on Contracts § 515 (1950) (oral testimony admissible to explain relationship between memoranda)). The existence of a contract modification is bolstered by the subjective intent and conduct of ...