Opinion ID: 2744068
Heading Depth: 2
Heading Rank: 1

Heading: Post-Resignation Commissions

Text: The parties agree that Alabama law controls their dispute concerning Tangen’s eligibility for post-resignation commissions based on the terms of the Program. See Horowitch v. Diamond Aircraft Indus., Inc., 645 F.3d 1254, 1257 (11th Cir. 2011) (“As a federal court sitting in diversity jurisdiction, we apply the substantive law of the forum state . . . alongside federal procedural law.”). “The elements of a breach-of-contract claim under Alabama law are (1) a valid contract binding the parties; (2) the plaintiffs’ performance under the contract; (3) the 4 Case: 14-11118 Date Filed: 10/21/2014 Page: 5 of 13 defendant’s nonperformance; and (4) resulting damages.” Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala. 2009) (citation omitted). Ideacom argues that the district court erred in concluding that Tangen was entitled to back-end commissions based solely upon the execution of a sales contract because Tangen resigned before installing the products or ensuring that the systems were operational and compliant with local code provisions. Tangen counters that he earned his back-half commissions by securing sales contracts prior to his resignation, and that the terms of the Program did not explicitly require that Tangen remain in Ideacom’s employment at the time a customer paid in full in order to receive his back-half commissions. We first note that the text of the Program contains no language that expressly conditions payment of back-half commissions on the performance of post-sale duties or provides for forfeiture of back-half commissions upon resignation. Thus, an ambiguity clearly exists in the contract’s terms relating to the payment of commissions after an employee voluntarily terminates his or her employment. Once a court decides that a contract is ambiguous, the determination of its meaning is for the factfinder, the trial court in this case. Miles College, Inc. v. Oliver, 382 So.2d 510, 511 (Ala. 1980). All of the circumstances leading to the agreement, including the interpretation placed on the language of the parties, are to be considered in ascertaining the intention of the parties. Hartford Accident v. 5 Case: 14-11118 Date Filed: 10/21/2014 Page: 6 of 13 Morgan Cnty. Ass’n, 454 So.2d 960, 961 (Ala. 1984). “And, where the evidence is received ore tenus, the findings of fact by the trial court after a determination that ambiguity exists in the contract are to be accorded a heavy presumption of correctness, and they will not be disturbed unless palpably wrong.” Creative Leasing, Inc. v. Canon, 496 So.2d 79, 81 (Ala. Civ. App. 1986). Turning to the instant appeal, there was sufficient evidence from which the trial court reasonably could have concluded that the parties intended commissions earned during Tangen’s course of employment to be payable after his resignation. See Lindy Mfg. Co. v. Twentieth Century Mktg., 706 So.2d 1169, 1175 (Ala. 1997) (holding that a sales representative was entitled to commissions on certain sales that were made after the termination of his employment). At trial, Tangen testified that he was paid back-half commissions on three of the twelve sales listed on his final commissions statement, even though there is no dispute that another company salesman, Ron Schrader, ultimately was responsible for oversight of installation. In a customer email, Ideacom’s President, John Robb, explained that Tangen’s role in a sale ended with the presales discussions; other employees were responsible for the “installation and implementation” of Ideacom’s products. Robb also testified that the motivation behind implementing the terms of the Program was to incentivize profitable sales and accurate sales quotes. But Robb made no mention about compensating his sales representatives for performing post-sale duties. 6 Case: 14-11118 Date Filed: 10/21/2014 Page: 7 of 13 Moreover, Doug Tomberlin, an Ideacom salesman also subject to the terms of the Program, testified that back-half commissions are earned as soon as a job is billed, and not when a customer pays in full. Based on this record, the district court did not err by determining that both front-end and back-end commissions were paid primarily as an incentive for pricing out profitable sales, and that a salesperson’s duty to perform post-sales duties was merely a collateral duty unrelated to the payment scheme. See Creative Leasing, Inc., 496 So. 2d at 80-81 (noting that evidence of a payment structure that varied based on the number of sales made rather than customer complaints handled supported a finding that commissions were earned by making sales, not by performing “collateral” post-sale duties that were “unrelated to compensation”). In its appellate brief, Ideacom argues at length that the district court erred in holding that evidence related to Tangen’s H-1B employment visa2 was irrelevant to the contract analysis. Specifically, Ideacom maintains that Tangen was obligated to perform every job duty listed in his H-1B petition, including “meeting with nursing and engineering professionals to design a nurse-patient communication system,” and “supervising the installation, meeting with hospital personnel and seeing that the system gets programmed.” We disagree. Although Tangen was expected to fulfill the general duties outlined in his H-1B job 2 Tangen, a native and citizen of Norway, was granted a “specialty occupation” H-1B employment visa in 2004 to work for Ideacom as a healthcare sales representative. 7 Case: 14-11118 Date Filed: 10/21/2014 Page: 8 of 13 description, there is nothing to indicate that these duties were tied to his commission payments, either pre- or post-resignation, as opposed to maintaining his employment status. In sum, the district court properly concluded that Tangen was entitled to back-end commissions on sales he made before he resigned from Ideacom, and we affirm the court’s award of $106,407.96 on his breach-of-contract claim.