New England Homes v. RJ Guarnaccia Irrevocable Trust, 2003-271

• Court: Supreme Court of New Hampshire
• Writing for the Court: BROCK, C.J., retired, specially assigned under RSA 4903
• Citation: 846 A.2d 502,150 N.H. 732
• Parties: NEW ENGLAND HOMES, INC. v. R.J. GUARNACCIA IRREVOCABLE TRUST & a.
• Docket Number: No. 2003-271,2003-272.,2003-271
• Decision Date: 16 April 2004

150 N.H. 732
846 A.2d 502

NEW ENGLAND HOMES, INC.
v.
R.J. GUARNACCIA IRREVOCABLE TRUST & a.

Nos. 2003-271, 2003-272.

Supreme Court of New Hampshire.

Argued: November 6, 2003.

Opinion Issued: April 16, 2004.

150 N.H. 733

J. Kirk Trombley, P.A., of Barrington (J. Kirk Trombley and Tracy A. LaChance on the brief, and Mr. Trombley orally), for the plaintiff.

Chubrich & Harrigan, P.A., of Portsmouth (Michael E. Chubrich on the brief and orally), for the defendants.

BROCK, C.J., retired, specially assigned under RSA 490:3.

In these consolidated cases, the plaintiff, New England Homes, Inc., appeals two

150 N.H. 734

orders of the Superior Court (Lewis, J.) upholding New Hampshire Department of Labor (DOL) rulings that it owed the employees, R.J. Guarnaccia and George Cooley, unpaid commissions and liquidated damages. We affirm in part, reverse in part, and remand

The DOL made the following findings of fact which are undisputed on appeal. Guarnaccia and Cooley worked as regional sales managers for the plaintiff until they resigned in February 2002. During their employment, their commission structure was set forth in a Letter of Understanding (Letter).

At the time of his resignation, Guarnaccia had sold twelve modular homes, which were in varying stages of manufacture and delivery. Subsequent to his resignation, two of the twelve orders were cancelled. Of the remaining ten homes he had sold, one was the property of Donahue Realty Trust. Cooley had secured orders for twenty-two homes, which the plaintiff had accepted, at the time of his resignation.

Guarnaccia and Cooley filed separate wage claims with the DOL in February 2002, alleging that the plaintiff failed to pay them their commissions as required by RSA 275:43, I (1999), and that the plaintiff was also liable for liquidated damages pursuant to RSA 275:44, IV (1999). Following a hearing, Guarnaccia was awarded $25,876.40 in commissions and $23,197.70 in liquidated damages. Cooley was awarded $41,232.92 in commissions and $41,232.92 in liquidated damages.

The plaintiff appealed both decisions. The superior court upheld the DOL's decision to award commissions and liquidated damages, but lowered the awards due to each employee.

On appeal, the plaintiff argues that the court erred in: 1) ordering that commissions were earned on homes that were delivered and paid for after Guarnaccia's and Cooley's resignations; 2) including the sale of a home owned by Donahue Realty Trust when calculating Guarnaccia's commissions; 3) excluding evidence of volume-based discounts when calculating Cooley's commissions; and 4) awarding liquidated damages. We address each of the plaintiff's arguments in turn.

"We will affirm the superior court's factual findings unless they are unsupported by the evidence and we will affirm the superior court's legal rulings unless they are erroneous as a matter of law." Richmond v. Hutchinson, 149 N.H. 749, 751 (2003).

I. Commissions Earned

The plaintiff first contends that the court erred in ordering that commissions were earned on homes delivered and paid for after the employees had resigned. Specifically, it argues that as a matter of law, an

150 N.H. 735

"employee is entitled to commissions on sales closed," as opposed to sales pending, absent an agreement otherwise. Galloway v. Chicago-Soft, 142 N.H. 752, 757 (1998) (emphasis added). The plaintiff argues that because both the plain language of the Letter and the practice of the parties indicate that sales were closed and commissions were earned "only when the modular home was delivered to the builder, set on the home owners' property, and New England Homes was paid in full," the employees are therefore not entitled to commissions on sales that were merely accepted, but not closed, prior to their resignation. The employees respond that as a matter of law, they earned commissions when the orders they solicited were accepted by the plaintiff. See id. at 756

The parties agree that our ruling in Chicago-Soft governs here. In that case, we stated that, generally, "a person employed on a commission basis to solicit sales orders is entitled to his commission when the order is accepted by his employer. The entitlement to commissions is not affected by the fact that payment for those orders may be delayed until after they have been shipped." Id. (quotation omitted). Although in Chicago-Soft, as pointed out by the plaintiff, we stated that an "employee is entitled to commissions on sales closed," Chicago-Soft, 142 N.H. at 757, the remainder of the opinion makes clear that closed sales are synonymous with accepted orders. Moreover, an examination of the cases upon which we based our standard in Chicago-Soft indicates that the employer's acceptance of an order signals closure of the sale; pending sales are those yet to be accepted, not those yet to be "closed" pursuant to the employer's standards. See Vector Engineering & Mfg. Corp. v. Pequet, 431 N.E.2d 503, 504-05 (Ind. Ct. App. 1982); Oken v. National Chain Co., 424 A.2d 234, 235 (R.I. 1981).

In Chicago-Soft, we further stated that "this general rule may be altered by a written agreement by the parties or by the conduct of the parties which clearly demonstrates a different compensation scheme." Chicago-Soft, 142 N.H. at 756-57 (quotation omitted). If the employer "intends for commissions to be calculated differently, either the contract language or the employer's acts must unambiguously demonstrate a departure from the general rule." Id. at 757. The question before us, then, is whether either the compensation schedule set forth in the Letter or the plaintiff's acts clearly demonstrate a deviation from the general rule articulated in Chicago-Soft. We do not believe they do.

The Letter signed by the employees states, in relevant part: "The commission will be 3½% (three and one-half percent) of the Net

150 N.H. 736

Builder/Dealer Price . . . unless any one of the following has not happened," and then sets forth a list of requirements that must be met in order to earn the full commission. At the end of that list, the Letter concludes by stating: "Note: If any of the above responsibilities are not met, a fee of one-half of one percent (½%) per contract will be deducted from the sales manager's commission — Commissions are credited to the sales manager's account when contract and terms are paid in full!"

Nothing in the plain language of the Letter clearly demonstrates that commissions are earned at any time other than when the plaintiff accepts the order, see id., nor does the Letter explicitly state that regional sales managers will "be divested of any entitlement to commission by virtue of their termination." Id.; see also Diana v. Burnside Motors, Inc., 304 A.2d 222, 224 (Conn. C.P. 1973).

Although the plaintiff argues that the plain meaning of the final sentence of the Letter indicates that commissions are earned when the home is set and the account is paid in full, we disagree. The Letter states only that commissions are credited when the contract is fully paid. While the plaintiff argues that "credited" means "earned," it is equally plausible, as the...