Weiser v. Godby Bros., Inc.

659 N.E.2d 237, 11 I.E.R. Cas. (BNA) 472, 1995 Ind. App. LEXIS 1663, 1995 WL 763392

• Court: Indiana Court of Appeals
• Decided: December 29, 1995
• Docket: 49A02-9410-CV-00612
• Status: Published

Opinions

OPINION

SULLIVAN, Judge.

William Weiser (Weiser) appeals the trial court's entry of a partial summary judgment in favor of his former employer, Godby Brothers, Inc. (Godby). Weiser had filed a complaint seeking $12,429.74 in unpaid commissions.¹

We reverse.

The facts most favorable to Weiser, the non-movant, are that Godby is an Indiana corporation which sells, installs, and maintains heating, ventilation, and air conditioning systems. From late 1990 until November 12, 1992, Godby employed Weiser as a commission salesman. On April 15, 1991, Godby and Weiser executed an agreement entitled "Sales Compensation Plan" (Plan). Record at 8. The relevant portions of the Plan state that Weiser was an employee at will and that Godby would pay him a commission based and calculated upon the gross profit realized by Godby on each job. The Plan states: "It is specifically understood and agreed to by Employer and Employee that no commission will be paid to Employee or credited to Employee's account after the termination of Employee's employment with the Employer." Record at 9. Godby asserts that the Plan "was signed and agreed to by Weiser in return for his continued employment at Godby Brothers." Record at 18. In this regard, Weiser's deposition disclosed that he believed that if he did not sign the agreement he would be fired.

In April 1992, Weiser, on behalf of Godby, submitted a bid on a job in Fordsville, Kentucky with a customer, Medco. Medco accepted the bid. Work was completed on November 12, 1992. Godby had agreed to allow Medco to pay for the project in three installments. Medco had already paid two of the installments when the project was completed. Godby was in the process of billing Medco for the third installment at the time the job was completed.

On November 12, the same day Godby had finished the project, Weiser's employment was terminated. Weiser filed a complaint in Marion Superior Court alleging a balance of at least $12,429.74 due him for commissions earned on the Fordsville project. Godby filed a motion for partial summary judgment addressed to Weiser's complaint. The motion did not address Godby's counterclaim. On June 22, 1994, the court entered judgment granting Godby's motion and denying Weiser relief. Weiser filed a Motion to Correct Error pursuant to Ind.Trial Rule 59 and a Motion for Relief pursuant to Ind.Trial Rule 60(B).

We address only one issue: Whether the trial court erred in granting the partial summary judgment.

The decision of the trial court was based upon Vector Engineering & Manufacturing Corp. v. Pequet (1982) Ind.App., 431 N.E.2d 503, trans. denied. In Vector, the court affirmed a judgment for an employee for withheld sales commissions, holding that if the employer had desired to deny commissions subsequent to an employee's termination, the employer could have so provided "in clear and unambiguous language." 431 N.E.2d at 505. The trial court, in the case before us, found such language in the Plan and therefore granted the summary judgment. In doing so, the court necessarily, if not explicitly, concluded that Weiser signed the Plan freely and voluntarily. Because the conclusion was reached in the context of a summary judgment, it was reached as a matter of law. We hold that the court erred in doing so.

In his response to the summary judgment motion, Weiser presented an argument that Godby exerted undue influence in indue-ing him to sign the Plan. In this regard, Weiser relies upon a statement made by Godby's vice president, who told Weiser, "this is a sales employment contract between Godby Brothers and yourself. Sign it or clean out your desk and you will be fired." Record at 331. Weiser also contends that Godby would not pay him $5,000 in previously earned commissions if he refused to sign. Whether the agreement was entered into freely and voluntarily is a question of fact not determinable by summary judgment. See Campbell v. Railroadmen's Fed. Sav. & Loan Ass'n. (1982) Ind.App., 443 N.E.2d 81; Rutter v. Excel Industries, Inc. (1982) IndApp., 438 N.E.2d 1030.

Godby places great emphasis upon the fact that Weiser was an employee at will and could be terminated at any time with or without reason. However, in this case, we are not concerned with the validity of the termination. We are concerned with the validity of the agreement which precluded payment of commissions after termination. Again, under the circumstances of this case, the matter is fact-sensitive and not susceptible to resolution by summary judgment. The matter of undue influence involves the mental state of the person claiming it. Therefore, it is a question of fact to be resolved by the trier of fact. First Nat'l Bank of New Castle v. Acra (1984) Ind.App., 462 N.E.2d 1345; Plumley v. Stanelle (1974) 160 Ind.App. 271, 311 N.E.2d 626.

Godby elaims that as an employee at will, Weiser had the option to either accept the Plan in its tendered form or to reject the Plan and "quit work." Brief of Appellee at 16. Godby correctly cites Wheeler v. Balemaster Div. of E. Chicago Mach. Tool Corp. (1992) Ind.App., 601 N.E.2d 447, for this proposition. However, Wheeler appears to focus upon the employee at will aspect of the relationship and carries an implication that under such a relationship, the employer does not owe the employee a duty of good faith and fair dealing. As earlier noted, our focus is upon the written sales compensation contract rather than upon Weiser's at will status. Although the contract terms may be wholly unambiguous and, thus, not amenable to a fair dealing requirement, the formulation of that contract is susceptible to a good faith/fair dealing analysis. As stated in First Fed. Sav. Bank of Indiana v. Key Markets, Inc. (1990) Ind., 559 N.E.2d 600, 604:

"There are, of course, equitable principles which might require the court to refuse to recognize the provisions of a contract where there is allegation and proof of fraud, misrepresentation, overreaching, undue influence, unjust enrichment or undue advantage of one party over the 'other."

The compensation contract here formalized the employment relationship between Weiser and Godby beyond the normal employment at will situation. To this extent, therefore, we do not believe that Hamblen v. Danners, Inc. (1985) Ind.App., 478 N.E.2d 926, decided by our First District, is persuasive in its holding that a duty of good faith and fair dealing is not owed by an employer to an employee at will.

In Prudential Insurance Co. of America v. Crouch (1985) S.D.Ind., 606 F.Supp. 464, aff'd, (1986) 7th Cir., 796 F.2d 477, decided two months before Hamblen, the court applied Indiana law to an employment contract case involving an insurance agent's right to commissions and held applicable the implied covenant of good faith and fair dealing. In doing so, the court relied upon Restatement (Second) of Contracts § 205 (1981) to the effect that:

"Every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement." 606 F.Supp. at 469.

Whether or not Indiana will apply the concept to contracts other than insurance contracts or employment contracts is not the question.² The fact remains that we deal here with an employment compensation contract and we deem the Crouch decision to be persuasive.

Whether the sales compensation contract was the result of undue influence and whether Godby failed to act in good faith or deal fairly with Weiser are questions of fact which should be decided by the trier of fact.

The partial summary judgment is reversed and we remand the matter of Weiser's commissions for trial along with the issues involved in Godby's counterclaim, which remains pending.

STATON, J., concurs in result and files separate opinion. FRIEDLANDER, J., dissents and files separate opinion.

1 . Godby filed a counterclaim alleging entitlement to advances against commissions paid to Weiser. That counterclaim remains pending in the trial court.

2 . In Ford Motor Credit Co. v. Garner (1988) N.D.Ind., 688 F.Supp. 435, the court, applying Indiana law, refused to extend the fair dealing requirement to a contract of guaranty, but noted that "such a duty [of good faith] seems manifestly reasonable." 688 F.Supp. at 443.