Taylor v. Lotus Development Corp.

• Decision Date: 20 October 1995
• Docket Number: Civ. A. No. 94-1139.
• Citation: 906 F. Supp. 290
• Parties: David M. TAYLOR, Plaintiff v. LOTUS DEVELOPMENT CORP., Defendant.
• Court: U.S. District Court — District of Maryland

906 F. Supp. 290

David M. TAYLOR, Plaintiff v. LOTUS DEVELOPMENT CORP., Defendant.

Civ. A. No. 94-1139.

United States District Court, D. Maryland.

October 20, 1995.

COPYRIGHT MATERIAL OMITTED

Joel M. Abramson, Columbia, MD, for plaintiff.

Ky E. Booth, Kirby, Swidler & Berlin, Washington, DC, for defendant.

MEMORANDUM OPINION

DAVIS, District Judge.

This case originated in the Circuit Court for Howard County, Maryland. On April 19, 1994, it was removed to this Court by the Defendant, Lotus Development Corporation ("Lotus"). This Court has jurisdiction pursuant to 28 U.S.C. § 1332. Both parties to this dispute have filed motions for partial summary judgment. The Court has considered the parties' various submissions, and no hearing is deemed necessary. Local Rule 105.6 (D.Md.1995).

(i)

A party moving for summary judgment is entitled to a grant of summary judgment only if no issues of material fact remain for the trier of fact to determine at trial. Fed.R.Civ.P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir.1991). A fact is material for purposes of summary judgment, if when applied to the substantive law, it affects the outcome of the litigation. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. Mere speculation by the non-movant cannot stave off a properly supported motion for summary judgment. See Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985). "When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e). See Celotex, 477 U.S. 317 at 324, 106 S.Ct. 2548 at 2553, 91 L.Ed.2d 265; Anderson, 477 U.S. at 252, 106 S.Ct. at 2512 ("mere existence of a scintilla of evidence" is insufficient for non-movant to withstand a motion for summary judgment); Shealy, 929 F.2d at 1012.

(ii)

The Plaintiff, David M. Taylor, a Maryland resident, was employed by Lotus from June 1992 until February 1994 as a computer software sales representative out of Lotus's District of Columbia office located in Arlington, Virginia.¹ Lotus, a Delaware Corporation, maintains its principal place of business in Massachusetts. Lotus develops, markets and sells computer software products throughout the world. Taylor's sales territory included the District of Columbia, Virginia, West Virginia and the southern half of Maryland. In June 1992, Taylor and Lotus entered into a formal written agreement ("employment agreement") which outlined the terms and conditions of Taylor's employment including the base salary and commissions that he was entitled to receive. The employment agreement set forth, inter alia, that Taylor

shall receive the compensation listed on his offer letter from Lotus Human Resources; in addition, he may participate in such employee benefit plans and receive such other fringe benefits according to the applicable benefit plan and Lotus Corporate Policies.... These employee benefit plans and fringe benefits may be amended, enlarged, or diminished by Lotus from time to time.

Pl.'s Mot.Part.Summ.J. at Ex. A.

On a yearly basis, Lotus modified its commission payment schedule. In April 1993, Lotus issued its "1993 Sales Plan: North American Sales" ("1993 Plan"), which set forth the additional compensation terms for that year. The 1993 Plan adjusted both the base salary and commissions components of Lotus's sales force's compensation. Page 10 of the 1993 Plan explained that commissions were to be calculated as follows:

Commission is calculated based on the year-to-date revenue for a sales representative's territory. Commission rates vary based on year-to-date performance and the number of months on quota. Employees must be on quota for four months to qualify for the second level payment rate of 1.5%. Employees must be on quota for seven months to qualify for the third level payment rate of 2.0%.

                    Performance                 Rate Per Dollar
                    Up to 100%                  1.25%
                    100%-110%                    1.5%
                    Over 110%                    2.0%
                

Id.

On June 24, 1993, Plaintiff sent an e-mail message to Wendy Taylor, a Lotus representative, asking for her help in understanding how his April bonus payment amount of $1176.00 was calculated.² Df.'s Cross-Mot. Part.Summ.J. and Op. to Pl.'s Mot.Part. Summ.J. at Ex. A-12. On June 28, 1993, Ms. Taylor responded by e-mail:

David,

Your April bonus was calculated as follows:

                YTD3 Quota                         1,128,680
                Times commission rate
                up to 100%                                × .0125
                                                     ___________
                Equals YTD earned at
                100%                                    14,108.50
                Total YTD Revenue                       1,599,036
                Minus YTD Quota                 -       1,128,680
                                                     ____________
                Equals YTD Revenue
                over 100%                                 470,356
                                                     ____________
                Times commission rate
                over 100%                                 × .0150
                Equals YTD earned over
                100%                                     7,055.34
                Plus YTD earned at
                100%                            +       14,108.50
                                                     ____________
                Equals YTD earned                       21,163.84
                Minus YTD paid                  -       19,988.00
                                                     ____________
                Equals Accelerator                       1,175.84
                

Id. at Ex. A-13. Plaintiff replied to Ms. Taylor's explanation by e-mail the following day, stating that "if I finished at the end of April $470,000 over quota, why am I not being paid 1.5% of that amount as indicated in your calculations? Why is the $7,055 amount being reduced to $1,175? I don't follow that commissions already paid to me should be backed out from a bonus payment?" Id. There is no indication from the documents submitted by the parties as to the outcome of this inquiry, or whether any additional inquiries were ever made.

In December 1993, Mike Lyons, the Sales Tracking Manager at Lotus, contacted Taylor. Lyons informed Taylor that since April 1993, Lotus had been incorrectly computing his commission payments. Lyons claimed that Lotus had been failing to deduct the commissions it had previously paid to Taylor prior to making its commission payments to him; therefore, according to Lotus's records, it had overpaid Taylor by approximately $44,000.00.

Whether or not Taylor acknowledged the alleged overpayments as being correct at that time is in dispute. Nevertheless, after some negotiation between Taylor and Lotus, Taylor apparently refused to return any monies to Lotus voluntarily. As a result, Lotus began to unilaterally withhold pay from Taylor in the following months in order to recoup its alleged losses.

By a letter dated February 15, 1994, Taylor gave Lotus two weeks notice of his intention to resign. In that letter, Taylor asserted that Lotus had failed to pay all the monies he was entitled to for work he performed in 1993, and he demanded payment of the outstanding sum. In response, Lyons sent a letter to Taylor, dated March 1, 1994, asserting that Lotus did not owe Taylor any monies; rather, Taylor still owed Lotus $27,110.06.

Taylor then instituted the present action. In his complaint, Taylor alleges that Lotus breached their contract. In addition, he contends that Lotus violated the Maryland Wage Payment and Collection Law, Md.Code Ann., Lab. & Empl. §§ 3-501 to 3-509 (1991 Repl.Vol., 1994 Cum.Supp.), in consequence of its failure to compensate him fully in the months following the impasse created by this dispute. Lotus counterclaimed for the approximately $27,000.00 that Taylor still owes it as a result of the alleged overpayments. Lotus contends that the overpayments were made in error, and that Taylor will be unjustly enriched if he is permitted to keep the overpayments. This action is currently before the Court on cross-motions by the parties for partial summary judgment with respect to liability only.

(iii)

Breach of Contract

(a)

As a threshold matter, it is imperative for this Court to determine the applicable law. Generally, when this Court exercises its diversity jurisdiction, it applies the substantive law of the forum state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); Erie Railroad v. Tompkins, 304 U.S. 64, 78-79, 58 S.Ct. 817, 822-23, 82 L.Ed. 1188 (1938). In this case, the forum is Maryland.

In Maryland, however, "it is now generally accepted that the parties to a contract may agree as to the law which will govern their transaction, even as to issues going to the validity of the contract." Kronovet v. Lipchin, 288 Md. 30, 43, 415 A.2d 1096, 1104 (1980). See also National Glass, Inc. v. J.C. Penney Properties, Inc., 336 Md. 606, 610, 650 A.2d 246, 248 (1994). Generally, a choice-of-law provision will be honored in Maryland, unless "1) the state whose law is chosen has no substantial relationship to the parties or the transaction; or 2) the strong fundamental public policy of the forum state precludes the application of the choice of law provision." American Motorists Ins. Co. v. ARTRA Group, Inc., 338 Md. 560, 572, 659 A.2d 1295, 1301 (1995). See also National Glass, 336 Md. at 610-11, 650 A.2d at 248; Kronovet, 288 Md. at 44-45, 415 A.2d at 1104-06; Restatement (Second) Conflict of Laws § 187 (1971, 1989 Supp.)⁴. It is undisputed that the parties to the present litigation signed an employment agreement which contains a choice-of-law provision. This provision states, in part, as follows:

This Agreement shall be governed and

...