In re CIS Corp.

• Court: U.S. Bankruptcy Court — Southern District of New York
• Citation: In re CIS Corp., 206 B.R. 680 (Bankr. S.D.N.Y. 1997)
• Decision Date: 26 March 1997
• Docket Number: Adv. No. 93-9830A.,Bankruptcy No. 89-B-10073 (PBA) to 89-B-10084 (PBA)
• Parties: In re CIS CORPORATION, Continental Information Systems Corporation, et al., Debtor. Patrick R. MONACO, Plaintiff, v. CIS CORP., Defendant.

206 B.R. 680 (1997)

In re CIS CORPORATION, Continental Information Systems Corporation, et al., Debtor Patrick R. MONACO, Plaintiff, v. CIS CORP., Defendant.

Bankruptcy Nos. 89-B-10073 (PBA) to 89-B-10084 (PBA), Adv. No. 93-9830A.

United States Bankruptcy Court, S.D. New York.

March 26, 1997.

COPYRIGHT MATERIAL OMITTED

Scolaro, Shulman, Cohen, Lawler & Burstein, P.C., Syracuse, N.Y. by Colin A. Fieman, for Plaintiff, Patrick Monaco.

Kirkland & Ellis, New York City by Bonnie Host and Jean Reed Haynes, for Trustee-Defendant.

MEMORANDUM DECISION ON COUNTS TWO AND THREE OF PLAINTIFF'S COMPLAINT GRANTING IN PART AND DENYING IN PART CROSS-MOTIONS FOR SUMMARY JUDGMENT

PRUDENCE CARTER BEATTY,^* Bankruptcy Judge.

This adversary proceeding was commenced by a former employee of the debtors for payment of vacation pay and of commissions alleged to be due him. The Chapter 11 Trustee moved for partial summary judgment on the six count complaint. The employee opposed that motion and filed a cross-motion for partial summary judgment. This court made an oral ruling against the employee on Counts One, Four and Five, requested supplemental papers on Count Two, and took Counts Two and Three under advisement.¹

This decision deals with Counts Two and Three of the complaint. Count Two seeks commission payments with respect to two transactions. For the reasons more fully set forth below, this court holds that the employee is not entitled to the commission payments he seeks in Count Two. Thus, the Trustee's motion for partial summary judgment will be granted as to Count Two.

As to the claims made in Count Three for liquidated damages and attorneys' fees under New York Labor Law § 190 et. seq. with respect to commissions and unpaid vacation pay conceded to be owing the employee, this court holds that the employee is entitled to recover liquidated damages and attorneys' fees. However, the employee is not entitled to any relief under the New York Labor Law in connection with the commissions he sought unsuccessfully. The request for pre-judgment interest is denied and interest is to be calculated from the date of judgment only.

STATEMENT OF FACTS

1. These Chapter 11 cases were commenced on January 13, 1989 when CIS and a number of its affiliates and subsidiaries (collectively "CIS" or the "Debtors") filed Chapter 11 petitions. The Debtors remained as debtors in possession until James P. Hassett was appointed Chapter 11 Trustee (the "Trustee") in late October 1989.

2. The employment of Patrick R. Monaco (the "Employee" or "Monaco") with CIS began in 1987 upon CIS' acquisition of the company with which Monaco had been employed since 1978. On the filing date, Monaco was the Regional Sales Manager for the Southeastern region of the United States, managing a staff of sales employees in CIS' Atlanta office. His responsibilities included the selling and leasing of computer equipment, and his salary was a base salary of $60,000 per year plus commissions.

3. Monaco's entitlement to commissions was governed by various incentive compensation agreements. CIS approved a new compensation plan for Regional Sales Representatives in February 1990 (the "February Plan"). In June of 1990, the February Plan was replaced with another incentive compensation plan (the "June Plan"). The parties have stipulated that each plan, in its turn, was a valid, enforceable written contract.

4. Both compensation plans provided for payment of commissions to an employee in the event that the employee's termination was not-for-cause.

5. The February Plan stated: "In the event that an employee is terminated, but not for cause, termination benefits will include compensation for transactions where a transaction summary was completed with all necessary approvals prior to termination. Commissions for such transactions will be paid in accordance with provision 3 Commission Payments above." (emphasis added)

6. The language in the June Plan providing for payment of commissions in the event of a termination not-for-cause was nearly identical to that of the February Plan. However, the June Plan used the words "all prerequisite approvals" instead of "all necessary approvals".

7. Both parties agree that there was a form known as the "Transaction Summary Form" which was utilized by sales representatives to provide information in summary form about a proposed transaction and obtain approvals of it.

8. The Transaction Summary Forms which were in use at the time of the transactions at issue had two columns on their right hand side. One column was labeled "Approval", the other was labeled "Date". The Approval column provided several boxes, designated by job titles, in which the persons in those positions were to place their initials. The Date column provided space for the date beside each set of initials.

9. After the 1989 filing of these Chapter 11 cases, resignations and dismissals occurred in the Southeastern Region. As a result, Monaco assumed increasing direct responsibility for the accounts in his region, including an account with Bell South Services Incorporated, which acted as agent for South Central Bell Telephone Company (the "Bell South" account). The disputed commissions that Monaco seeks are with respect to transactions in the Bell South account (the "Bell South Transactions").

10. In March and October of 1990, CIS made commission payments totalling $25,272 to Monaco in connection with another transaction.

11. Thereafter, Monaco sought an additional commission payment of $63,664 on that other transaction. In June 1991, a commission check was issued to Monaco in the amount of $38,539.

12. On July 12, 1991, the Trustee notified Monaco by memo that there had been an overpayment of commissions to him which would be recovered from other commissions as they came due. The overpayment was subsequently recouped out of future commissions, with a deduction for imputed interest against Monaco for the prior overpayment. Some of the recoupment was made from commission payments due on Bell South transactions. Monaco did not agree that there had been a prior overpayment and continued to request additional commissions.

13. Thereafter, by letter dated September 19, 1991, the Trustee terminated Monaco's employment.²

14. At the time of Monaco's termination, several Bell South transactions that Monaco had handled were not yet completed. The Bell South account was subsequently reassigned to another sales representative who completed the transactions. The finalized transactions were premised on negotiations on new proposals with new transaction numbers.

15. On November 2, 1993, Monaco filed this adversary proceeding seeking commissions totalling $68,392 for various transactions, including, in Count Two, several with Bell South. Monaco also claimed in Count Three that he was entitled under the New York Labor Law to liquidated damages and attorneys' fees over and above his claims for compensation. He further sought interest and costs.

16. After the Trustee moved for Partial Summary Judgment and Monaco cross-moved for Partial Summary Judgment, the parties filed a Joint Submission Pursuant to Local Bankruptcy Rule 7056-1 (the "Joint Submission") in which the parties presented a stipulation of facts.³ The Joint Submission resolved all but two of the forty-seven transactions identified in Count Two of Monaco's complaint.

17. The parties agreed that the only transactions which remained in dispute were two Bell South Transactions, totalling $3890 in commissions. These were Transaction No. 115328/Bell South in the amount of $2742 and Transaction No. 115358/Bell South in the amount of $1148.

18. The Transaction Summary Form for Transaction No. 115328/Bell South had five signed boxes in the Approval column at the time of Monaco's departure and six unsigned boxes. The Transaction Summary Form for Transaction No. 115328/Bell South had seven signed boxes in the Approval column and six unsigned boxes.⁴

19. The parties further stipulated that Monaco had been employed by CIS, and was owed $6160 in unpaid commissions for the balance of the transactions listed in Count Two. The figure of $6160 was derived by subtracting from Monaco's initial request for $40,267 the still disputed amount of $3890, as well as the $30,217 to which the parties agreed that Monaco was not entitled. The parties further agreed that Monaco was owed $3000 for unused vacation.

20. The court held a hearing on these motions on May 30, 1996 and ruled against Monaco as to Counts One, Four and Five. The court took the balance of Counts Two and Three under advisement, requesting supplemental affidavits from the parties.

21. The supplemental affidavits invited by the court were to set forth whether Monaco had in fact obtained the necessary or prerequisite approvals for the Bell South Transactions prior to his termination. The court also stated that it would accept supplementary submissions concerning whether it was customary for CIS to account for the time value of money when recovering an overpayment from future commissions.

22. Both parties submitted additional affidavits. Monaco's supplemental papers included a chronology of Monaco's involvement with the Bell South transactions as well as a request for pre-judgment interest on the conceded commissions and vacation pay. Monaco's supplemental papers further stated that the arrangement Monaco had with his counsel was that counsel was to receive twenty-five percent of any amount recovered on Monaco's behalf. Monaco did not make any submission regarding whether the interest calculated in applying the earlier overpayment to later commissions was customary. Since Monaco has not made an additional submission regarding that issue, the court concludes that the Trustee accounted for the time value of money in the customary manner.

23. The Trustee's supplemental papers asked that Monaco's papers be struck as nonresponsive. The Trustee also argued that summary judgment on...