Gurnik v. Lee, 49A02-9007-CV-432

• Decision Date: 03 March 1992
• Docket Number: No. 49A02-9007-CV-432,49A02-9007-CV-432
• Citation: 587 N.E.2d 706
• Parties: Greg GURNIK and Jo Lynn Gurnik (Dickinson), Appellants-Plaintiffs, v. M. Monroe LEE, the Travel Trade, Inc., and Lee Corporation of Indiana, Inc., Appellees-Defendants.
• Court: Indiana Appellate Court

Page 706

587 N.E.2d 706

Greg GURNIK and Jo Lynn Gurnik (Dickinson), Appellants-Plaintiffs, v. M. Monroe LEE, the Travel Trade, Inc., and Lee Corporation

of Indiana, Inc., Appellees-Defendants.

No. 49A02-9007-CV-432.

Court of Appeals of Indiana,

Second District.

March 3, 1992.

David F. McNamar, Patrick M. O'Brien, Steers, Sullivan, McNamar & Rogers, Indianapolis, for appellants-plaintiffs.

John L. Stewart, Michele J. Calderon, Klineman, Rose, Wolf & Wallack, Indianapolis, for appellees-defendants.

BUCHANAN, Judge.

CASE SUMMARY

Plaintiff-appellant Jo Lynn Dickinson (Dickinson) appeals from the trial court's determination that the funds owed to her by defendant-appellee The Travel Trade, Inc. (Travel) were not "wages" under Ind.Code 22-2-5-2 (1988), and she also claims that the trial court erred when it refused to pierce Travel's corporate veil to reach defendants-appellees M. Monroe Lee (Lee) and the Lee Corporation of Indiana, Inc. (Lee Corp.). ¹

We affirm in part and reverse in part.

FACTS

The facts most favorable to the trial court's judgment reveal that in October, 1983, Dickinson, Gurnik, Lee and Lee's wife entered into an agreement to organize a corporation to operate as a travel agency. They organized Travel, with the Lees owning 75% of the stock and Gurnik owning the remaining 25%. Lee agreed to provide the capital for the operation of Travel.

Dickinson executed an employment agreement, assuming the role of president of Travel. The agreement provided that she would receive an annual salary of $30,000, payable in weekly installments, and a minimum annual bonus of $5,300, or a percentage of the net profits for the year. The agreement provided that the bonus would be pro rated if Dickinson was not employed at the end of the year; the bonus was not conditioned on whether Travel was profitable.

The Lee Corp. was a general construction contractor, and Lee was its sole shareholder. Travel operated as a travel agency from October 1983 until 1987. During its operation, Lee personally loaned Travel approximately $191,000 and the Lee Corp. loaned it approximately $200,000.

Dickinson was paid her $5,300 bonus for 1984. She resigned from Travel in October, 1985, and her last day of employment was in December, 1985. Dickinson was not paid her bonus for 1985. Travel never made a profit and ceased operation in 1987. Its Wisconsin office was sold for $30,000 and various pieces of office equipment were sold for $2,000. The funds were applied to Travel's loans with Lee and the Lee Corp.

Dickinson filed a claim against Travel, Lee and the Lee Corp. [hereinafter collectively referred to as Appellees], seeking her 1985 bonus, plus damages and attorney's fees in accordance with IC 22-2-5-2. The trial court granted a partial summary judgment in favor of the Appellees, determining that the bonus was not a "wage" as used in IC 22-2-5-2 and that Dickinson was not entitled to damages and attorney's fees. After a bench trial, pursuant to Dickinson's motion, the trial court entered findings of fact and conclusions of law, incorporating its earlier partial summary judgment, and awarding Dickinson $5,300.

The trial court's initial order provided that Dickinson's judgment was against Lee. After the trial court granted the Appellees' motion to reconsider its findings, it issued new findings and conclusions on March 29, 1990, which provided that Dickinson's judgment was against Travel.

ISSUES

1. Whether the trial court erred when it determined Dickinson's bonus was not a "wage?"

2. Whether the trial court erred when it entered Dickinson's judgment against Travel?

DECISION

ISSUE ONE--Did the trial court properly conclude that Dickinson's bonus was not a "wage?"

PARTIES' CONTENTIONS--Dickinson argues that the bonus was part of her regular compensation and was therefore a "wage" as contemplated by IC 22-2-5-2. Travel replies that caselaw provides that bonuses are not "wages" as that term is used in the statutes.

CONCLUSION--The trial court erred when it determined the bonus was not a "wage."

To decide this issue we must gingerly pick our way through two relevant statutes. The first one is IC 22-2-5-2 (1988) [hereinafter referred to as Section 2], which provides:

"Every such person, firm, corporation, or association who shall fail to make payment of wages to any such employee as provided in section 1 of this chapter shall, as liquidated damages for such failure, pay to such employee for each day that the amount due to him remains unpaid ten percent (10%) of the amount due to him in addition thereto, not exceeding double the amount of wages due, and said damages may be recovered in any court having jurisdiction of a suit to recover the amount due to such employee, and in any suit so brought to recover said wages or the liquidated damages for nonpayment thereof, or both, the court shall tax and assess as costs in said case a reasonable fee for the plaintiff's attorney or attorneys." (Emphasis supplied).

The second one is IC 22-2-5-1 (1988) [hereinafter referred to as Section 1] which provided:

"Every person, firm, corporation or association, their trustees, lessees or receivers appointed by any court whatsoever doing business in this state shall pay each employee thereof at least semi-monthly or bi-weekly, if requested, the amount due such employee and such payment shall be made in the lawful money of the United States or by negotiable check, draft or money order and any contract to the contrary shall be void. Such payment shall be made for all wages earned to a date not more than ten (10) days prior to the date of such payment: Provided, That nothing herein shall be taken to prevent payments being made at shorter intervals than herein specified nor to repeal any law providing for such payments: Provided, however, That should any employee voluntarily leave his employment, either permanently or temporarily, such employer shall not be required to pay such employee any amount due until the next usual and regular day for payment of wages, as established by such employer: Provided, further, That in the event such employee leaves his employment voluntarily, and without his whereabouts or address being known to such employer, such employer shall not be subject to the provisions of IC 1971, 22-2-5-2 [Section 2] of this chapter, unless and until ten (10) days have elapsed, after such employee has made a demand for such wages due him, or has furnished such employer with his address, where such wages may be sent or forwarded to him." (Emphasis supplied).

Unfortunately these statutes do not provide a definition for "wages" as that term is used in Sections 1 and 2. Dickinson relies upon this court's decision in Licocci v. Cardinal Associates, Inc. (1986), Ind.App., 492 N.E.2d 48, trans. denied, to support her claim that the unpaid 1985 bonus constituted unpaid wages as contemplated by Sections 1 and 2.

In Licocci, we considered whether accumulated commissions were wages under Sections 1 and 2. The employees in Licocci received weekly draws from their accumulated commissions, with a year-end draw settlement if the employees' total annual commissions exceeded their weekly draws. Recognizing that Sections 1 and 2 did not define "wages," we looked to other statutory definitions of wages to determine whether the employees were entitled to damages for unpaid commissions. After examining worker's compensation law, employment security law, IC 22-2-9-1, and Black's Law Dictionary's definition of wages, we concluded that the commissions were wages pursuant to Sections 1 and 2.

Although not necessarily conclusive, IC 22-2-9-1(b), relating to wage claims, does offer a definition of wages: "The term 'wages' means all amounts at which the labor or service rendered is recompensed, whether the amount is fixed or ascertained on a time, task, piece, or commission basis, or in any other method of calculating such amount."

Also instructive is our decision in Baesler's Super-Valu v. Ind. Comm'r of Labor (1986), Ind.App., 500 N.E.2d 243. There, we determined that the employer's failure to pay the employee's vacation pay warranted damages and attorney's fees in accordance with Section 2. We relied in part on the previous decision in Die & Mold, Inc. v. Western (1983), Ind.App., 448 N.E.2d 44, which decided that vacation pay constituted wages under IC 22-2-4-4. (IC 22-2-4-1 and 22-2-4-4, relating specifically to mining and manufacturing businesses, provide for periodic payment of wages and penalties similar to the provisions of Sections 1 and 2). In Die & Mold, we concluded that vacation pay was an additional wage, earned each week but deferred until a later time.

Travel attempts to counter Dickinson's arguments with Wilson v. Montgomery Ward & Co. (N.D.Ind., 1985), 610 F.Supp. 1035. In Wilson, the court was faced with a claim for damages and attorney's fees under Section 2 for the employer's failure to pay severance pay. The court characterized the severance pay as a "bonus" that did not constitute regular compensation so that severance pay was not a "wage" within the meaning of Sections 1 and 2 and that "wages" under Sections 1 and 2 were "something akin to the wages paid on a regular, periodic basis for regular work done by the employee...." Id. at 1038. It then observed that the severance pay bore no relation to the time worked and that it was something extra to the employee's regular compensation.

In Jeurissen v. Amisub, Inc. (1990), Ind.App., 554 N.E.2d 12, trans. denied, this court accepted Wilson 's definition of "wages" as "appropriate under the facts of this case...." Jeurissen, supra at 13. In Jeurissen, it was decided that a bonus based on the financial success of the employer, and which was not tied to regular work done on a periodic basis by the employee, was not a wage subject to damages and attorney's fees for nonpayment pursuant to Section 2.

However, contrary to Travel's position, the law in Indiana does not exclude a bonus as...