Case Title: Cave Hill Corporation v. Hiers

Citation: 

Docket Number: 020060

State: virginia

Court: Virginia Supreme Court

Date: 2002-11-01T00:00:00Z

Document:
PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Kinser, and 
Lemons, JJ., and Compton, S.J. 
 
CAVE HILL CORPORATION 
v.  Record No. 020060 
PHILLIP T. HIERS                           OPINION BY 
SENIOR JUSTICE A. CHRISTIAN COMPTON 
PHILLIP T. HIERS                       November 1, 2002 
 
v.  Record No. 020070 
 
CAVE HILL CORPORATION 
 
FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY 
John J. McGrath, Jr., Judge 
 
 
These two appeals arise from a single action for damages 
alleging breach of an employment contract.  The central question 
is whether the trial court erred in refusing to rule that the 
contract was clear and unambiguous, and in submitting to a jury 
the interpretation of the agreement. 
 
To set the stage, relevant facts, mostly undisputed, that 
furnish the background and details of this controversy must be 
reviewed.  In 1993, plaintiff Phillip T. "Chuck" Hiers commenced 
work as a sales person for defendant Cave Hill Corporation in 
its division, Atlantic Fabritech, located in Rockingham County.  
The defendant manufactures above ground storage tanks, primarily 
for use in the oil and lubrication industry. 
 
On September 9, 1998, the plaintiff and defendant, through 
its president and sole shareholder, Walter M. Hopkins, executed 
the one-page contract that is the subject of this dispute.  The 
agreement was "composed" by plaintiff and Hopkins, and was 
typewritten on a page of Atlantic Fabritech stationery. 
 
The contract is labeled: 
"EMPLOYMENT AGREEMENT 
EMPLOYEE: PHILLIP T. 'CHUCK' HIERS 
TITLE: SALES MANAGER 
EFFECTIVE DATES: August 14, 1998 – August 1, 2003" 
 
In a preamble, the writing stated:  "This work agreement 
established on August 14, 1998 between Cave Hill Corporation, 
d/b/a Atlantic Fabritech and Phillip T. Hiers is based on the 
following conditions." 
 
Paragraph 1 provided for a $25,000 annual salary plus a 
cost-of-living increase. 
 
Paragraph 2 provided, in part, for a two per cent 
commission to be paid plaintiff "on Atlantic Fabritech tank 
sales quoted, processed, generated and sold by Chuck." 
 
Paragraphs 3 and 4 provided for use of a company vehicle 
and for an expense allowance. 
 
Paragraph 5 provided:  "Thirty (30) days' notice will be 
given by both the employee and the employer in the case of leave 
or dismissal." 
 
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Paragraphs 6 and 7 provided for a vacation period, and for 
medical and dental insurance. 
 
The agreement concluded with an unnumbered paragraph 
delineating plaintiff's job responsibilities. 
 
During the negotiations for the contract, Hopkins told the 
plaintiff that one Stacey Sinnett, a former Cave Hill employee, 
would be reemployed.  The plaintiff understood that Sinnett was 
to work for him in sales and in product development.  However, 
the plaintiff learned the day after the contract was signed that 
Sinnett was to be the general manager of Atlantic Fabritech and 
that the plaintiff would have "to report to" Sinnett. 
 
Thereafter, disagreement between plaintiff and Hopkins 
developed over job duties, commissions on sales, and plaintiff's 
overall performance of his assigned work.  Specifically, 
plaintiff contended that, under the employment agreement, he was 
entitled to commissions on all sales, that is, not only on sales 
that he made but also on sales that Sinnett made.  Hopkins took 
the position that the plaintiff was not entitled to a commission 
on Sinnett's sales. 
 
During the period from September 1998 to May 6, 1999, the 
disagreement continued, with Sinnett issuing "warnings" to 
plaintiff about the performance of his duties.  Finally, Sinnett 
recommended to Hopkins that plaintiff's employment be terminated 
because of "the way he handled several volume accounts . . . not 
 
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making as many sales calls . . . as he should, not travelling as 
much as we needed . . . [and] not having his office organized."  
Hopkins had observed that plaintiff "repeatedly" was late for 
work and that he was "working on other projects," including 
"selling guns and cars . . . during company business time."  
Additionally, according to Hopkins, plaintiff was unable "to get 
along with" Sinnett, would not conform to new policies 
established by Sinnett, and "fell out with some of the 
customers." 
 
Eventually, plaintiff was discharged.  In a May 6 letter to 
the plaintiff, Sinnett wrote:  "We find it necessary to 
terminate your employment with Cave Hill Corporation as the 
Sales Manager for the Atlantic Fabritech Division effective this 
date.  You will receive your salary for the month of May, which 
we will give you today." 
 
Subsequently, plaintiff filed the present action seeking 
damages for breach of the employment contract.  In a motion for 
judgment, plaintiff asserted that he improperly "was denied 
payment of commissions based on sales negotiated and approved by 
Sinnett;" that he was criticized "with unjustified and untrue 
accusations of inadequate job performance;" that he had been 
guaranteed "a fixed term of employment to run from August 14, 
1998 to August 1, 2003;" and that he had been "terminated 
without just cause." 
 
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In a grounds of defense, defendant denied plaintiff had 
been employed for a fixed term.  Defendant also filed a 
counterclaim seeking damages from plaintiff for breach of 
another agreement between the parties; the plaintiff had 
promised not to disclose certain confidential and proprietary 
information and not to compete with defendant upon termination. 
 
During an August 2001 jury trial, the trial court permitted 
the plaintiff to testify extensively, over defendant's 
objection, to his "understanding" of many of the terms of the 
employment contract.  For example, plaintiff said his 
"understanding" was that he "would be paid 2% commission on 
. . . all tank sales" not "just 2% of what [he] personally sold 
to a customer."  Also, plaintiff testified about "the intent of 
the parties" as set forth in the final paragraph of the 
agreement relating to job responsibilities. 
 
The trial court, over defendant's objection, permitted the 
jury to interpret the contract, ruling that the agreement was 
unclear and ambiguous.  The court instructed the jury that it 
"must determine whether the contract is for a definite term of 
employment or whether it is a contract for employment that is 
terminable at will."  The court also told the jury that just 
cause was required for an employer to terminate a fixed-term 
employment contract prior to the end of the term. 
 
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The jury found in favor of the plaintiff on his claim, 
fixing the damages at $260,000, and denied the counterclaim.  
Subsequently, in an October 2001 judgment order ruling on 
defendant's motion to set the verdict aside, the trial court 
ordered remittitur to $100,000, and otherwise entered judgment 
on the verdict in favor of the plaintiff. 
 
We awarded the defendant an appeal of the court's judgment 
for the plaintiff.  We also awarded the plaintiff an appeal of 
the court's action in ordering remittitur. 
 
Although the parties dwell upon the admissibility of parol 
evidence with regard to those portions of the contract dealing 
with commissions and job responsibilities, the core of these 
appeals is the question whether the trial court erred in 
refusing to rule, as urged by defendant, that the contract was 
clear and unambiguous in establishing an employment that was 
terminable at will.  Stated differently, the crux of the 
controversy upon review is whether the trial court erred in 
determining that a jury issue was created regarding the nature 
of the contract. 
 
Settled principles are applicable here.  "In Virginia, an 
employment relationship is presumed to be at-will, which means 
that the employment term extends for an indefinite period and 
may be terminated by the employer or employee for any reason 
upon reasonable notice."  County of Giles v. Wines, 262 Va. 68, 
 
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72, 546 S.E.2d 721, 723 (2001).  However, when the employment is 
for a definite period, the presumption of at-will employment is 
rebutted and an employee may be terminated only for just cause.  
Progress Printing Co. v. Nichols, 244 Va. 337, 340, 421 S.E.2d 
428, 429 (1992).  And, when there is a conflict in the evidence 
concerning the terms of an employment contract, the question 
whether the employment is at will or for a definite term becomes 
one of fact to be resolved by the jury.  Miller v. SEVAMP, Inc., 
234 Va. 462, 465-66, 362 S.E.2d 915, 917 (1987). 
 
In the present case, the trial court submitted the 
interpretation of the contract to the jury because the court 
ruled that its terms were ambiguous.  "An ambiguity exists when 
language admits of being understood in more than one way or 
refers to two or more things at the same time."  Renner 
Plumbing, Heating & Air Conditioning, Inc. v. Renner, 225 Va. 
508, 515, 303 S.E.2d 894, 898 (1983).  However, "[c]ontracts are 
not rendered ambiguous merely because the parties or their 
attorneys disagree upon the meaning of the language employed to 
express the agreement."  Doswell Ltd. P'ship v. Virginia Elec. 
and Power Co., 251 Va. 215, 222-23, 468 S.E.2d 84, 88 (1996).  
And, "[e]ven though an agreement may have been drawn unartfully, 
the court must construe the language as written if its parts can 
be read together without conflict." Id. at 223, 468 S.E.2d at 
88. 
 
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On appeal, the plaintiff contends the trial court did not 
err in permitting the jury to interpret the agreement.  He 
argues there was a conflict over the contract's terms and their 
meaning.  In particular, he maintains he "presented evidence and 
argument that the Contract was for a definite term of five years 
('Effective Dates:  August 14, 1998 – August 1, 2003' . . .) and 
that, therefore, the Contract was terminable only upon just 
cause and with termination effective only following thirty days 
notice."  We do not agree. 
 
We hold that the contract was clear and unambiguous.  In 
plain terms, the contract was effective for a designated period 
of time.  Nevertheless, the agreement specifically was subject 
to certain "conditions," as mentioned in the preamble.  The 
significant condition relevant here is that either party could 
terminate the contract upon 30 days notice, according to the 
clear terms of paragraph 5.  This notice provision trumped the 
effect of the designated time period. 
 
Nowhere in this writing is there any reference to a "just 
cause" requirement for job termination by the employer.  In 
order to find such a requirement, one would have to insert words 
into the writing contrary to the elementary rule that the 
function of the court is to construe the contract made by the 
parties, not to make a contract for them.  See Wilson v. 
Holyfield, 227 Va. 184, 187, 313 S.E.2d 396, 398 (1984). 
 
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Consequently, we hold that the trial court committed 
reversible error in refusing to decide as a matter of law that 
the contract was one terminable at will and in permitting the 
jury to interpret the agreement.  Because plaintiff was an at-
will employee, the defendant properly terminated him upon giving 
30 days notice, and the defendant's conduct in this regard is 
not actionable. 
 
In view of the foregoing ruling, the parol evidence 
question becomes a subsidiary issue.  It necessarily follows 
from what we already have said that the trial court also erred 
in admitting extrinsic evidence of the plaintiff's 
"understanding" to explain the terms of the agreement relating 
to commissions.  "Parol evidence of prior or contemporaneous 
oral negotiations are generally inadmissible to alter, 
contradict, or explain the terms of a written instrument 
provided the document is complete, unambiguous, and 
unconditional."  Doswell Ltd. P'ship, 251 Va. at 222, 468 S.E.2d 
at 88 (quoting Renner, 225 Va. at 515, 303 S.E.2d at 898). 
 
We address the parol evidence issue only because the 
plaintiff did have an employment contract, albeit one that was 
terminable at will.  Thus, he had a potential claim for failure 
of defendant to pay commissions due under the contract.  
However, we hold that paragraph 2 plainly provides for 
commissions on "tank sales quoted, processed, generated and sold 
 
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by Chuck," and not upon such sales sold by Sinnett.  Therefore, 
plaintiff, as a matter of law, was not entitled to recover any 
sum for commissions on Sinnett's sales. 
 
Consequently, the judgment in favor of the plaintiff will 
be reversed and final judgment will be entered here in favor of 
Cave Hill Corporation.  This ruling renders the other appeal 
moot, and it will be dismissed. 
 
Record No. 020060 – Reversed and final judgment. 
 
 
       Record No. 020070 – Dismissed. 
 
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