Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-02165/USCOURTS-azd-2_08-cv-02165-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Julia Ann Talley, 

Plaintiff, 

vs.

Pembrooke Occupational Health, Inc., 

Defendant. 

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No. CV-08-2165-PHX-FJM

ORDER

The court has before it defendant’s motion for partial summary judgment (doc. 41),

plaintiff’s response (doc. 45), and defendant’s reply (doc. 49). We also have before us

plaintiff’s motion for summary judgment (doc. 43), defendant’s response (doc. 47), and

plaintiff’s reply (doc. 50). 

I

Plaintiff Julia Talley worked as a salesperson for Pembrooke Occupational Health,

Inc., a company providing pre-employment drug screening for client companies. On July 11,

2003, she entered into a written employment contract with Pembrooke that described the

terms and conditions of her employment and compensation. PSOF, exhibit 1 (“employment

contract”). The agreement stated that “Commissions of 5% of revenue will be paid for 24

months beginning with the first month that the client is billed. Beginning month 25, 1% of

revenue will be paid until your termination of employment with Pembrooke.” Id. The

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contract further provided that “Commissions will be paid on all fees to the clients sold by you

except the cost of collection fees.” Id.

In October 2004, plaintiff secured a contract with the Department of Interior (“DOI”).

PSOF ¶ 11. Due to the nature of the contract, the commission structure was modified for this

client, id., however, the modified agreement was not reduced to writing. Talley contends that

she was entitled to receive 2% for all revenues, including “collection fees,” collected from

the DOI for the first 3 years of the contract, and 1% thereafter until termination of her

employment. Id. ¶¶ 11, 13; Talley Deposition at 167-68. Pembrooke paid Talley 2%

commissions on the DOI contract for almost a year from December 2004 through October

2005. PSOF ¶ 14; DCSOF ¶ 14. In December 2005, Pembrooke stopped paying Talley DOI

commissions, claiming that the contract was not profitable. Diveley Deposition at 49. She

was then told in May 2006 that she was not receiving DOI commissions because DOI was

in arrears in its payments. However, even after Pembrooke received the past due DOI

payments, it neither informed Talley of the payments, nor paid her commissions on the

revenue. PSOF ¶ 28. Pembrooke eventually renegotiated the terms of the agreement with

DOI in order to make the pricing structure profitable. Cametas Depostion at 16. 

Talley did not receive any commission payments on the DOI account after December

2005, although DOI remained a Pembrooke client. Pembrooke stopped paying Talley

commissions on all of her accounts as of January 2008, although she remained employed

with Pembrooke until January 2010. PSOF ¶ 43. 

Talley filed this action against Pembrooke for breach of the employment contract on

October 22, 2008. 

II

Pembrooke seeks partial summary judgment on Talley’s claim for commissions on

the DOI account, asserting that it is barred by the statute of limitations. It argues that because

Talley knew that the DOI commission payments stopped in December 2005, she had until

December 2006 to file this claim. It therefore contends that her October 2008 claim is timebarred. 

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A claim for breach of employment contract must be filed within one year after the

cause of action accrues. A.R.S. § 12-541(3). Generally, a cause of action accrues and the

statute of limitations begins to run when one party is able to sue another. Gust, Rosenfeld

& Henderson v. Prudential Ins. Co., 182 Ariz. 586, 588, 898 P.2d 964, 966 (1995).

However, under the “discovery rule,” when the injury or the act causing the injury has been

difficult for the plaintiff to detect, the statute of limitations does not begin to run until the

plaintiff knows or with reasonable diligence should know of the facts underlying the alleged

breach. Id. 591, 898 P.2d at 969. The discovery rule is premised on the notion that “it is

unjust to deprive a plaintiff of a cause of action before the plaintiff has a reasonable basis for

believing that a claim exists.” Id. at 589, 898 P.2d at 967. 

Although Talley was aware that Pembrooke had stopped paying DOI commissions in

December 2005, she repeatedly inquired into the status of those payments while Pembrooke

provided varying excuses for the delay. Pembrooke’s president, Stefan Cametas, told Talley

in December 2005 that she would no longer receive DOI commission payments. DSOF ¶ 7.

In May 2006, Pembrooke’s CFO told Talley that her commission payments were delayed

because DOI’s payments were past due. PCSOF ¶ 15. Over the course of many months,

Talley was told that the DOI commissions were not paid because DOI was in arrears, id., that

the CFO is “swamped” and is trying to hire additional help, id. ¶¶ 18-19, that the CFO was

not able to calculate her commissions in time for a fourth quarter commissions check, id. ¶

31, that a “revenue posting delayed [her] paycheck,” id., that the “systems were broken” so

there was a problem with closing the books, id. ¶ 33, and ultimately the CFO explained that

he believed Talley had received an “overpayment,” yet no overpayment calculation was

produced, id. ¶¶ 38-39. As late as October 9, 2008, Pembrooke’s owner, Jon Cametas

continued to assure Talley that he was working on the commission calculation. Id. ¶ 70. 

Because of Pembrooke’s ongoing assurances and excuses, Talley did not have a

reasonable basis for believing that she had a claim until well into 2008. We conclude that

Talley’s claim for DOI commissions is timely. Pembrooke’s motion for partial summary

judgment is denied (doc. 41).

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III

Talley also moves for summary judgment arguing that no material fact exists

regarding Pembrooke’s breach of her employment agreement and that she is therefore

entitled to judgment as a matter of law. She contends that she was entitled to commission

payments under her employment contract but that Pembrooke failed to pay DOI commissions

since December 2005 and non-DOI commissions since January 2008. PSOF ¶ 43. She

claims that she is entitled to past due commissions in the amount of $133,858.00. Id. ¶ 41.

She also claims that she is entitled to treble damages under A.R.S. § 23-355, which subjects

an employer to treble damages if it fails to pay earned wages. 

Pembrooke counters that material issues of fact preclude summary judgment. It first

attempts to create a factual dispute regarding the terms of the commission agreement on the

DOI account. Talley contends that she was entitled to 2% of all revenue received from the

DOI for the first 36 months of the contract, then 1% of all revenue thereafter until the date

of termination of her employment. In opposition, Pembrooke argues only that Russell Basch,

the Pembrooke representative who negotiated the DOI commission arrangement, “cannot

remember the details of the agreement he reached with Plaintiff.” Pembrooke Response at

5. This is insufficient to create an issue of fact regarding the terms of the agreement. See

Fed. R. Civ. P. 56(e)(2). Pembrooke acknowledges that it paid Talley 2% commissions on

the DOI contract for almost a year during 2004 to 2005. DCSOF ¶ 14. This, as well as

Talley’s sworn testimony, is uncontroverted evidence of at least some of the terms of the

agreement.

Pembrooke also argues that an issue of fact exists as to how long Talley was entitled

to receive commissions on the DOI account. While the employment contract provides that

Talley is generally entitled to receive commissions on her clients’revenue “until [her]

termination of employment with Pembrooke,” PSOF, exhibit 1, Pembrooke now contends

that its DOI commission obligation ended when Stefan Cametas informed Talley in

December 2005 that she would no longer receive commissions because the account was

unprofitable. This presents a legal question, not a factual dispute. The issue is whether

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Pembrooke had the legal authority to cancel the commissions agreement if the underlying

contract was unprofitable. Pembrooke presents no support for this position and thus it will

not serve to defeat summary judgment on this issue. We conclude that Pembrooke had an

obligation to pay Talley commissions on the DOI account and that it breached its obligation

by failing to pay Talley any DOI commissions after December 2005. The amount of the

damages on this claim remains open.

Other issues of material fact exist that preclude summary judgment. For example, the

question of whether Talley was entitled to receive commissions on all DOI revenue, or

whether “collection fees” were to be deducted is unresolved. An issue also exists as to

whether Pembrooke’s CFO applied the incorrect commission percentage entitling it to a setoff against Talley’s damages claim. An issue also exists as to whether Pembrooke can show

that a reasonable good faith dispute supported its decision to withhold Talley’s wages as far

back as December 2005. See A.R.S. § 23-352(3). Because these and other factual issues

remain, we deny Talley’s motion for summary judgment. 

IT IS ORDERED DENYING Pembrooke’s motion for partial summary judgment

(doc. 41). 

IT IS FURTHER ORDERED GRANTING IN PART AND DENYING IN PART

Talley’s motion for summary judgment (doc. 43). The motion is granted as to liability on

Talley’s breach of contract claim regarding the DOI account. The motion is otherwise

denied. 

DATED this 21st day of April, 2010.

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