Ellicott v. Am. Capital Energy, Inc.
| Decision Date | 12 October 2018 |
| Docket Number | No. 17-1421,17-1421 |
| Citation | 906 F.3d 164 |
| Parties | Stephen ELLICOTT, Plaintiff, Appellee, v. AMERICAN CAPITAL ENERGY, INC., Thomas Hunton and Arthur Hennessey, Defendants, Appellants. |
| Court | U.S. Court of Appeals — First Circuit |
Robert K. Dowd, with whom Robert K. Dowd P.C., Dallas, TX, was on brief, for appellants.
Christopher A. Kenney, Southborough, MA, with whom Anthony L. DeProspo, Jr., Boston, MA, and Kenney & Sams, P.C. were on brief, for appellee.
Before Torruella, Selya, and Lynch, Circuit Judges.
This case concerns a contract dispute between a solar energy company and a former sales employee. Appellee Stephen Ellicott ("Ellicott") filed suit against Appellants American Capital Energy, Inc. ("ACE") and its two principals, Thomas Hunton ("Hunton") and Arthur Hennessey ("Hennessey") (collectively, "Appellants"), claiming violations of the Massachusetts Wage Act and breach of contract. A jury found for Ellicott. The district court entered judgment and awarded Ellicott $2,876,490 in damages, plus reasonable attorney's fees and costs. Displeased with this result, Appellants challenge a series of rulings by the district court. Appellants question, among other things, whether Ellicott's compensation constituted "wages" under the Wage Act and whether the statute of limitations for his Wage Act claim was properly tolled. We affirm after careful review.
The facts, viewed, as they must be, "in the light most favorable to the verdict," follow. Sinai v. New England Tel. & Tel. Co., 3 F.3d 471, 472 (1st Cir. 1993).
Appellants Hunton and Hennessey are co-founders of ACE, a company that procures, engineers, and installs large-scale solar energy systems. Hunton is ACE's president and Hennessey its chief financial officer. Hunton and Hennessey are principals of the company.
In 2007, ACE hired Ellicott as Director of Business Development, tasking him with the sale of large-scale solar installations to commercial clients, primarily in California. Ellicott was not a principal or joint-venturer of ACE, but rather a full-time employee compensated on a commission-draw basis. On April 23, 2008, ACE executed a written contract that established Ellicott's compensation plan. Among other provisions, the compensation plan stated that ACE would pay Ellicott a sales commission of "40% of profit margin on each sale and installation to be paid within [thirty] days after the client pays ACE and installation is complete." The compensation plan also stipulated that the sales commissions "may be reasonably split with various sales support personnel by mutual agreement," and that ACE would pay Ellicott a monthly draw, equal to an annual rate of $120,000, credited against his commissions.
From 2007 to 2012, Ellicott sold nine solar installation projects. For each of these projects, the parties stipulated at trial the (1) contract date; (2) project completion date; (3) final payment date; (4) project revenue; and (5) direct project costs. The gross revenue of Ellicott's solar installation projects exceeded $37 million, with eight of the nine projects generating a profit. Seven of the eight profitable installations were paid for in full more than three years before Ellicott filed suit on April 2, 2014. Below, the parties disputed whether Ellicott, in fact, made the "sale" on each of the projects and how the sales commission, if any was due, should be calculated. During trial, Ellicott testified that although it continued to pay him the monthly draw until October 2012, ACE did not pay his earned commissions from any of the profitable projects.
Beginning in 2010, and again in early 2011, Ellicott inquired about the payment status of his commissions to both Hunton and Hennessey. Ellicott had multiple conversations with Hunton, who assured Ellicott that he would discuss the issue with Hennessey and that the commission payments would be taken care of.
In October 2011, Ellicott had an in-person meeting with both Hunton and Hennessey to follow up on the payment status of his commissions. There, Hunton and Hennessey informed Ellicott that: (1) he should share his commissions with ACE's support staff; (2) ACE would deduct 5.6% from his commissions for overhead and burden costs and 1% for maintenance costs; (3) certain solar installment projects were actually considered "house accounts" and therefore not a "sale" by Ellicott for which he was entitled to a commission; and (4) ACE would apply a 30% commission rate rather than the 40% established in the 2008 compensation plan. Ellicott did not agree to any of these additional compensation conditions, which were being presented to him for the first time. The meeting ended without resolution. Before concluding, Hennessey told Ellicott that ACE "should be able to start getting [him] some of [his] commissions in December," and that they would provide him with an updated spreadsheet detailing his earned commissions. Ellicott, however, never received the updated spreadsheet.
After the October 2011 meeting, Ellicott continued to work for ACE and received his monthly draw until October 2012, when ACE ceased making these payments.1 Ellicott nonetheless continued working for ACE after October 2012. Then, in June 2013, Ellicott's health insurance and cell phone coverage—both provided by ACE—were cancelled. Shortly thereafter, Ellicott stopped working for ACE, but the company never formally terminated his employment.
Ellicott filed suit against Appellants in Massachusetts Superior Court seeking compensation for the unpaid sales commissions on April 2, 2014. His complaint alleged two claims: (1) violation of the Wage Act and (2) breach of contract. On May 16, 2014, Appellants removed the case to the United States District Court for the District of Massachusetts.
After some extensive motion practice, which included the district court's denial of the parties' cross-motions for summary judgment, Ellicott filed a motion in limine on July 22, 2016 to exclude from trial any extrinsic evidence suggesting that he was required to split his commissions. The district court allowed the motion in limine on December 23, 2016, thereby barring Appellants from introducing "extrinsic evidence to vary the unambiguous terms" of their 2008 compensation plan with Ellicott.
On December 30, 2016, two weeks before trial was set to commence, Appellants asked the district court to reconsider its grant of Ellicott's motion in limine and offered new testimony in an attempt to prove that Ellicott had agreed to split his sales commissions. Ellicott opposed reconsideration and moved to preclude Appellants from introducing testimony offered for the first time on the eve of trial. In open court, the district court denied Appellants' motion for reconsideration and granted Ellicott's request to exclude Appellants' proposed new testimony. The court excluded the proposed evidence, finding, inter alia, that it contradicted prior deposition testimony offered pursuant to Fed. R. Civ. P. 30(b)(6).
A jury trial was held from January 17 until January 24, 2017. At the close of evidence, Appellants unsuccessfully moved for directed verdict on Ellicott's Wage Act claim, arguing that the Wage Act did not apply to Ellicott's sales commissions. On January 24, 2017, the district court charged the jury.
The jury verdict form listed ACE, Hunton, and Hennessey separately, and tasked the jury with finding liability and the amount of damages as to each. The jury found all three defendants liable under the Wage Act, but allocated $958,830 in damages under the Wage Act to ACE and $0 to Hunton and Hennessey. The jury also found ACE liable for breach of contract.
All parties urged the court to ask the jury to reconsider its answers. After conferring with both sides at sidebar and finding the verdict to be inconsistent, the district court asked the jury to reconsider its responses about Hunton's and Hennessey's liability under the Wage Act. The jury then returned a new verdict form that again found all defendants liable under the Wage Act, but this time allocated $758,830 in damages to ACE and $100,000 to each individual defendant.
Appellants immediately moved for mistrial, a request that the district court denied. On February 2, 2017, Appellants moved again for mistrial, contending that the district court erred in granting Ellicott's motions in limine, and for judgment notwithstanding the verdict, arguing that Ellicott's sales commissions were profit-based and therefore fell outside the Wage Act's scope. The district court denied both motions.
On February 6, 2017, the district court entered judgment in favor of Ellicott on both claims, pursuant to the jury's second verdict form.2 The final judgment totaled $2,876,490, plus reasonable attorney's fees and costs.
About a month later, Appellants filed a motion to modify the award under Fed. R. Civ. P. 59(e). Therein, Appellants argued that the district court should lower their personal liability to $2,276,490 because (1) the court had erred in finding them liable for a greater damages award than the corporate defendant; (2) there was insufficient evidence to establish tolling as to Ellicott's Wage Act claim against Hennessey; (3) the court should not have granted the motion in limine barring evidence as to whether Ellicott had agreed to split his sales commissions; and (4) the Wage Act did not apply to Ellicott's sales commissions because the commissions were profit-based. The district court denied Appellants' motion on April 3, 2017.
Appellants' challenge is limited to a series of rulings by the district court and the sufficiency of the evidence about whether Ellicott's Wage Act claims were equitably tolled. We address each of the issues raised by Appellants in turn.
Whether Ellicott's sales commissions constituted wages under the Wage Act was put to the jury, and implicit in the jury's verdict was the determination that the...
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