Johnston v. Green Mountain, Inc.
| Decision Date | 16 July 1993 |
| Citation | 623 So.2d 1116 |
| Parties | T.D. "Johnny" JOHNSTON v. GREEN MOUNTAIN, INC., et al. 1920106. |
| Court | Alabama Supreme Court |
John A. Wilmer of Wilmer & Shepard, P.A. and J. Allen Brinkley of Brinkley, Chestnut & Aldridge, Huntsville, for appellant.
Lee H. Zell, Susan S. Wagner and Patricia Clotfelter of Berkowitz, Lefkovits, Isom & Kushner, Birmingham, for appellees.
T.D. "Johnny" Johnston began working as a sales manager for Green Mountain, Inc., in April 1988. Johnston's employment contract provided that he was to receive a salary of $50,000 his first year with Green Mountain and, thereafter, an annual base salary of $40,000 and "commissions equal to one-half percent ( 1/2) of the amounts actually received by the Employer during the applicable year from gross sales for such year in excess of ($2,000,000.00) ('Commissions')." Johnston also signed deferred compensation and trust agreements providing that no amount would be payable if Johnston voluntarily terminated his employment prior to the expiration of the initial five-year term of employment.
Keith Schonrock and his wife joined with Gerry Donovan and his wife in 1986 to form Green Mountain, a franchise of Uniglobe Travel (hereinafter "Uniglobe"); together, the Schonrocks own 98%, and the Donovans own 2%, of the stock in Green Mountain. The company makes airline, hotel, and car rental reservations and provides related travel services for corporate and individual customers and derives nearly all of its income from sales commissions paid by airlines, hotels, and other providers of travel services. Green Mountain acquired the assets of Madison Travel (hereinafter "Madison") in May 1989. Schonrock had joined with four other persons in 1969 to form a company called M & S Computing, which later became Intergraph Corporation, and, on April 30, 1990, that company and Green Mountain signed a contract whereby Green Mountain agreed to pay to Intergraph all sales commissions and related revenues generated by Intergraph commercial travel in exchange for exclusive on-premises access by Green Mountain to Intergraph employees in order to solicit leisure travel business. Intergraph also agreed to pay Green Mountain a nominal fee for recordkeeping. Green Mountain entered into a consulting contract with Intergraph on January 17, 1990, under which Schonrock served as an independent contractor to Intergraph on matters unrelated to the travel business. The consulting fees pursuant to this agreement were $5,000 a month and were paid directly to Green Mountain. Schonrock was not personally compensated for his services.
In June 1990, Green Mountain received two awards from Uniglobe for outstanding sales. According to Schonrock and Donovan, sales for periods since the Madison acquisition are as follows:
April 26, 1989, to April 25, 1990:
Green Mountain, Inc. $ 1,413,944.66
Madison Travel $ 810,494.38
Intergraph Corporation $ 7,411,278.59
April 26, 1990, to April 25, 1991
Green Mountain, Inc. $ 1,343,119.79
Madison Travel $ 1,162,356.75
Intergraph Corporation $ 14,710,388.60
April 26, 1991, to July 21, 1992: 1
Green Mountain, Inc. $ 2,794,286.01
Intergraph Corporation $ 17,618,241.15
Johnston approached Donovan in July 1990 to discuss his commissions and was told that, under the applicable provision of his contract, the Intergraph and Madison sales would be excluded in calculating his commission. At issue was the "amounts actually received" portion of the provision. During a February 11, 1991, meeting with Johnston, Donovan presented Johnston with a "talking paper" concerning his compensation, which read, in part:
"1. Additional compensation provision of employment agreement is intended as incentive to reward your success in increasing Green Mountain, Inc.'s, sales.
While it is not intended to 'nit-pik' as to which new sales are the result of your efforts or the efforts of others over whom you have no control, two events of 1989 clearly fall outside the intent of the additional compensation provision: (a) the purchase of new business through the Madison Travel agency acquisition and (b) the Intergraph STP [satellite ticket printer] arrangement. Madison Travel purchase brought in a sales base of $1,000,000 annually; the Intergraph deal was struck between Keith Schonrock and Jim Meadlock.
"Bottom line: for purposes of computing incentive compensation, annual sales will be reduced by (1) $1,000,000 (Madison base); and (2) all sales attributed to the Intergraph deal."
Throughout the month of February, discussions between Johnston and Donovan and Schonrock became deadlocked and, on March 7, 1991, Johnston resigned from his employment with Green Mountain.
In his complaint, as amended, against Schonrock, Donovan, and Green Mountain, Johnston alleged breach of contract (Count I) and fraud (Count II) and sought to have Green Mountain's corporate identity disregarded and to impose personal liability on Schonrock and Donovan (Count III). The trial court dismissed Count I as to Schonrock and Donovan individually. It entered a summary judgment for all of the defendants on Counts II and III and on that portion of Count I which sought commissions and salary that allegedly accrued following Johnston's resignation. Finally, the trial court denied that portion of the defendants' motion for summary judgment pertaining to Johnston's claim for deferred compensation as well as Johnston's motion for partial summary judgment on Counts I and III. Thus, Johnston's claim in Count I that Green Mountain breached its employment agreement with him by failing to pay his commissions is still pending in the trial court. 2 Johnston appeals from the summary judgment made final pursuant to Rule 54(b), A.R.Civ.P.
Johnston's alter ego argument is twofold. He contends that Schonrock and Donovan had him assume "numerous duties and responsibilities" that were unrelated to Green Mountain and for which his sole compensation was his salary from Green Mountain. Specifically, Johnston claims that his involvement in two organizations--Executive Connection and Friends of Recreational Ice Activities ("FRIA")--precluded him from soliciting business for Green Mountain and, thereby, increasing his commissions. He also claims that Schonrock's "symbiotic" relationship with Intergraph prompted Intergraph to enter into the exclusive sales agreement with Green Mountain, the revenues from which were not included in calculating his commissions.
Executive Connection was formed in 1987 to handle travel services that were outside the scope of the normal commercial travel arrangements handled by Uniglobe, particularly aircraft and limousine charters. It was originally owned by the Schonrocks and another couple, Alan and Inez Wilson, but the Donovans later bought the Wilsons' interest. Executive Connection's board of directors named Johnston vice president of the company in June 1988. Schonrock testified at his deposition regarding Johnston's involvement with Executive Connection as follows:
FRIA is a volunteer organization in which Schonrock and the Donovans were involved. After Johnston began working for Green Mountain, Schonrock asked Johnston if he would chair a committee to raise money for FRIA, and Johnston agreed. During Johnston's involvement with FRIA--which lasted until he left Green Mountain--the organization raised approximately $1,500,000.
The defendants contend that Johnston has failed to show that he was harmed by their allegedly improper actions. In order to pierce Green Mountain's corporate veil, Johnston must show not only that the dominant party has complete control and domination of the subservient corporation's finances, policy, and business practices but also that it misused that control to Johnston's detriment. First Health, Inc. v. Blanton, 585 So.2d 1331 (Ala.1991). ...
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