Kerwood v. Dinero Solutions, LLC

• Decision Date: 25 June 2008
• Docket Number: No. A08A0459.,A08A0459.
• Parties: KERWOOD v. DINERO SOLUTIONS, LLC.
• Court: Georgia Court of Appeals

666 S.E.2d 40

292 Ga.App. 742

KERWOOD v. DINERO SOLUTIONS, LLC.

No. A08A0459.

Court of Appeals of Georgia.

June 25, 2008.

Reconsideration Denied July 16, 2008.

Bovis, Kyle & Burch, Melanie M. Norvell, Atlanta, for appellant.

Thomas G. Tidwell, for appellee.

MILLER, Judge.

Wayne D. Kerwood appeals from the trial court's grant of summary judgment against him and in favor of his former employer, Dinero Solutions, LLC ("Dinero"), on Kerwood's claim for breach of contract. We reverse, finding that the trial court erred in holding that the contract clause at issue was unenforceable as a matter of law.

In reviewing a grant or denial of summary judgment, this Court conducts a de novo review of the evidence. Mathews v. Marietta Toyota, 270 Ga.App. 337, 606 S.E.2d 862 (2004). To prevail, the moving party must demonstrate that there is no genuine issue of material fact and that the evidence, and all reasonable conclusions and inferences drawn from it, viewed in the light most favorable to the nonmovant, entitle it to judgment as a matter of law. Id. Similarly, the construction of a contract, including the existence or nonexistence of any ambiguities found therein, represents a question of law for the court, subject to a de novo standard of review on appeal. See Coker v. Coker, 265 Ga.App. 720, 721, 595 S.E.2d 556 (2004); Jaraysi v. Yates, 206 Ga.App. 217, 218, 424 S.E.2d 793 (1992).

So viewed, the evidence shows that Dinero is a consulting firm that employed Kerwood as an executive vice president from May 2005 until May 2006. Kerwood negotiated the terms of his employment contract with Chris Goeckel, Dinero's CEO and owner (the "Contract"). Kerwood and Goeckel also served as the two members of Dinero's "Management Team." The Contract provided that Kerwood would be paid an annual, base salary of $160,000 as well as "variable compensation," to be calculated on a quarterly basis. With respect to variable compensation, the Contract stated:

It is the intent of Dinero Solutions to fairly ... recognize, reward, and retain its Management Team based on the achievement of the Company's Strategic Plan, Financial Goals, and individual contributions.

Accordingly, Dinero Solutions' Management Team will construct a financial model of the Company's Earnings before Tax using Actuals Based Accounting. This model shall identify special monies and any weightings that do not represent [a] 50/50 split by project for the two members of the [M]anagement [Team] and shall include the following components:

Including SAG¹ mutually agreed to by the Management Team

Less planned or extraordinary reserves agreed to by the Management Team.

A baseline of this model is included in Attachment A.

(Emphasis supplied.)

The Contract further provided that, in the event Dinero terminated Kerwood's employment, Kerwood would continue to receive variable compensation "for all identified projects [Kerwood] is associated with in the Variable Compensation Model." Such payments were to start one month after Kerwood's termination and continue "until all such projects are completed or terminated by the client," or until twelve months after Kerwood's termination date.

Kerwood testified that, under the terms of the variable compensation clause, he was to receive 50 percent of the profits on all projects Dinero brought in during his tenure, with the profits for each project being determined by using Attachment A to the Contract. Attachment A, in turn, was a series of spread sheets that allowed Kerwood and Goeckel to determine a project's profits using expenses, costs associated with selling the project, costs associated with staffing the project, and revenues received.

Kerwood explained that the "financial model" referenced in the variable compensation clause as being developed in the future was to be used on projects where either he or Goeckel did a disproportionate share of the work (i.e., "special weightings") or where they decided to pay a Dinero employee a bonus (i.e., "special monies"). Until that model was developed, however, the profits on each project brought in during Kerwood's tenure was to be split equally between Kerwood and Goeckel.

Kerwood further testified that during his employment at Dinero, he was paid variable compensation on at least one project and that the amount of that compensation was determined using Attachment A to the Contract. Kerwood's is the only testimony of record and is therefore undisputed.

After it terminated Kerwood's employment, Dinero refused to pay him any variable compensation associated with profits earned on projects brought in during Kerwood's tenure. Kerwood initiated the current action, claiming breach of contract and seeking to recover between $628,700 and $780,000 in variable compensation.²

Dinero moved for summary judgment, asserting that the variable compensation clause represented an "agreement to agree in the future" and was therefore unenforceable as a matter of law. The trial court agreed and granted Dinero's motion, finding that, because it contained no "fixed formula for determining future compensation," the Contract was too indefinite to be enforced. This appeal followed.

Kerwood argues that the trial court erred in granting summary judgment to Dinero because the evidence showed the existence of material issues of fact as to: (i) whether the parties intended that Kerwood receive 50 percent of the profits for projects booked after he began work for Dinero, using Attachment A to the Contract to calculate the profits for each such project; and (ii) whether the payment of variable compensation to Kerwood of 50 percent of the profits of a project, calculated using Attachment A, obviated any indefiniteness in the variable compensation clause. We agree.

The trial court's ruling was based on the general requirement that a promise of future compensation must either "be for an exact amount or based upon a formula or method for determining the exact amount of the [compensation]." (Citation and punctuation omitted.) Arby's, Inc. v. Cooper, 265 Ga. 240, 241, 454 S.E.2d 488 (1995). Applying that principle, the trial court concluded that the Contract "has no fixed formula to determine future compensation; it only establishes general guidelines for future compensation based on a financial model that was not created, and based on discretionary factors that the [M]anagement [T]eam would later agree upon." (Emphasis supplied.)

This conclusion, however, ignores the fact that the "future" language of the variable compensation clause could be interpreted to apply only to those projects on which the two members of the Management Team were not going to split the profits on a 50/50 basis. In light of this...