Opinion ID: 2994671
Heading Depth: 2
Heading Rank: 1

Heading: Telular Appeal

Text: The jury found that Telular breached its contract with Houben and that it had violated the IWPCA for failing to pay her the commissions to which she was entitled. The jury was instructed that it could find for Houben on the breach of contract claim if the contract provided that commissions were earned as soon as a conditional sales agreement was entered into or if it concluded that the contract entitled Houben to commissions if she was the procuring cause of the sales to Motorola. Telular challenges both theories on appeal. Telular contends that the district court erred in not finding as a matter of law-- in either its motions for summary judgment or judgment as a matter of law-- that under the language of the Telular commission plan, Houben was not entitled to a commission for her work on the Hungary Motorola project. Telular first argues that the court should have found that the commission plan was unambiguous, and that it clearly barred Houben’s claim. It thinks this turns on the meaning of the term revenue, which it then argues can only be interpreted as income received after product was shipped. Alternatively, it argues that even if the term revenue in the commission plan is ambiguous, the extrinsic evidence so overwhelmingly supported Telular’s interpretation that the court should have found it to be the only one supported by the facts. Finally, it urges that even under Houben’s interpretation of the commission plan, no event giving rise to a right to commissions occurred during Houben’s tenure at Telular, because no orders were received during that time period, and that this fact alone should have precluded her claim. We begin with the well-accepted principle that when contract construction is at issue, the question whether contractual terms are ambiguous or not is a question of law for the court to decide. See, e.g., Independent Construction Equipment Builders Union v. Hyster-Yale Materials Handling, Inc., 83 F.3d 930, 932 (7th Cir. 1996). (We note that the allocation of responsibilties between judge and jury is a question of federal law, see Mayer v. Gary Partners & Co., 29 F.3d 330, 333-35 (7th Cir. 1994), even though it is uncontested that the substance of this contract is governed by Illinois law.) If the contract is ambiguous, the proper construction of the contract’s terms--that which accords with the intent of the parties--is a question of fact, and we may turn to extrinsic evidence to determine the intent of the parties. See Rossetto v. Pabst Brewing Co., 217 F.3d 539, 542 (7th Cir. 2000); see also C.A.M. Affiliates, Inc. v. First Am. Title Ins. Co., 715 N.E.2d 778, 782 (Ill. App. Ct. 1999). Although as we noted, the parties have argued about the meaning of the term revenue in these instruments, we believe that debate misses the central point here. Telular is not really arguing about the meaning of the term revenue in itself; its point has to do with the questions of who is entitled to a commission and at what time is that right earned. The written instruments offer no guidance on either point. The silence of the contract requires us to turn to the extrinsic evidence, as we did in Rossetto, supra. The evidence of Telular’s long-standing practice indicates that commissions were earned on revenues actually generated from products shipped. Houben has no quarrel with this interpretation. She does not claim, for example, that she is owed commissions on the announced potential sales of $100 million on the Motorola Hungary project; instead, she claims only commissions based on the sales that actually went through. Granting that Telular indeed earned money from the Hungarian project, the only dispute is about what events entitled Houben to commission payments, when those events occurred, and whether such events had to occur during the time of her employment in order for her to receive a commission for those sales. Telular contends that all of the extrinsic evidence demonstrates that under the commission plan, commissions were not earned until the product was shipped. It then concludes that because no products for the Motorola Hungary project were shipped during the time that Houben was still employed with Telular, she earned no commissions for that project. Even if we assume that the event triggering a right to a commission was the shipment of the product, there was sufficient evidence for the jury to conclude that the commission was attributed to the salesperson or team responsible for the sale at the time the deal was struck, not at the time of shipment. The evidence does not demonstrate that commissions were as a matter of practice no longer attributable to the employee who did the legwork on the sale simply because she left the company, was fired, or moved to a different job within the company between the time the sale was closed and the shipment of the product. One Telular executive testified that when the deal is struck, you make your decision then as to who the commissions--who is entitled to commissions; but you physically don’t pay the money until cash is received. In addition, although Telular normally did not pay a commission on a sale until it had the money from the sale in hand, there were exceptions to this practice. Indicating that it regarded the right to the commission as having accrued, even if the money had not yet been paid out, Telular allowed salespersons to take out advances on expected commissions in order to ease their cash flow. The company treated the advance like a loan and deducted it from the salesperson’s eventual commissions; if the salesperson was terminated before the commission came through, however, the advance would be forgiven. To similar effect (though also susceptible to interpretation in Telular’s favor), when Telular was downsizing and asking people to leave, the company paid the person half thecommissions he would have been entitled to as a type of severance package. In short, although the evidence in Houben’s favor was not overwhelming, it was enough for a reasonable jury to conclude--as this one did--that Houben was entitled to a commission on those sales she helped to procure even though she was no longer employed by Telular at the time the products were shipped. We therefore find that the district court did not err in denying Telular’s motions for summary judgment and judgment as a matter of law, nor did it abuse its discretion in denying Telular’s motion for a new trial. We would reach the same result under the procuring cause doctrine, which entitles a party to commission on sales made after termination of a contract if that party procured the sales through its activities prior to termination. Hammond Group, Ltd. v. Spalding & Evenflo Cos., 69 F.3d 845, 850 (7th Cir. 1995), quoting Scheduling Corp. of Am. v. Massello, 503 N.E.2d 806, 809 (Ill. App. Ct. 1987). The purpose of this rule is to protect a salesperson who is discharged prior to the culmination of a sale, but after he or she has done everything that is necessary to effect the sale. Furth v. Inc. Publ’g Corp., 823 F.2d 1178, 1180 (7th Cir. 1987), citing Schroeder v. Meier-Templeton Assocs., Inc., 474 N.E.2d 744, 750 (Ill. App. Ct. 1984). Telular argues that Houben should not have been able to present the procuring cause theory to the jury, because the procuring cause doctrine is unavailable if the parties have specifically contracted about when commissions were to be paid. See Scheduling Corp., 503 N.E.2d at 809. As explained above, however, the parties to this contract did not specifically contract as to when commissions were to be paid, given the silence of the contract regarding the accrual of the right to a commission and the timing of commission payments. On the merits, Telular contends there was insufficient evidence for the jury to find that Houben was the procuring cause of Telular’s sales to Motorola on the Hungary project. Telular argues that no firm commitment from Motorola was received during Houben’s tenure, and that Houben was only a minor participant in the actual sales effort, as her duties were largely administrative. The jury was not compelled to see things as Telular now portrays them. Although Motorola placed no actual purchase order during Houben’s tenure, Telular did win the competition to be Motorola’s supplier on the deal and it publicized that fact several months before Houben’s departure. One Telular executive testified that Telular’s victory in the Motorola Hungary deal constituted a firm order: You would never go public like this [with a press release] if you didn’t believe [the order] was firm. Telular’s argument that Houben was a minor participant in the sale runs up against the fact that the company created a special sales team to focus on the Hungary deal and placed Houben at its head. She may not have been the salesperson on the ground in Hungary, but she was responsible for overseeing the work of the sales team and figuring out how to position Telular to get the contract. Ultimately, whether Houben was the procuring cause of the Motorola Hungary sales was a question of fact to be decided by the jury. Again, although the evidence was not overwhelming, it was sufficient for a reasonable jury to find that Houben deserved credit--and a commission--for the sale under Illinois’s procuring cause doctrine.