Court Opinion

ID: 2747226
Source: CourtListenerOpinion
Date Created: 2014-10-31 02:50:34.922745+00
Date Added: 2024-06-11T09:32:32.582501
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                             September 2014 Term
                                                                    FILED
                                                              October 30, 2014
                                                                 released at 3:00 p.m.
                                 No. 13-0932                   RORY L. PERRY II, CLERK
                                                             SUPREME COURT OF APPEALS
                                                                  OF WEST VIRGINIA

                         CHRISTOPHER D. ADKINS,
                          Plaintiff Below, Petitioner

                                      v.

                     AMERICAN MINE RESEARCH, INC.,
                        Defendant Below, Respondent

                Appeal from the Circuit Court of Kanawha County

                     The Honorable Tod J. Kaufman, Judge

                               Case No. 11-C-307

                        REVERSED AND REMANDED

                         Submitted: September 9, 2014

                            Filed: October 30, 2014

J. Michael Ranson, Esq.                    Lawrence E. Morhous, Esq.

Cynthia M. Ranson, Esq.                    Jerad K. Horne, Esq.

RANSON LAW OFFICES                         BREWSTER, MORHOUS, CAMERON,

Charleston, West Virginia                  CARUTH, MOORE, KERSEY &

and                                        STAFFORD, PLLC

G. Patrick Jacobs, Esq.                    Bluefield, West Virginia

JACOBS LAW OFFICE, PLLC                    Attorneys for Respondent

Charleston, West Virginia

Attorneys for Petitioner

JUSTICE WORKMAN delivered the Opinion of the Court.
                              SYLLABUS BY THE COURT

              1.     “A circuit court’s entry of summary judgment is reviewed de novo.”

Syl. Pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).

              2.     “‘“A motion for summary judgment should be granted only when it

is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is

not desirable to clarify the application of the law.” Syllabus Point 3, Aetna Casualty &

Surety Co. v. Federal Insurance Co. of New York, 148 W. Va. 160, 133 S.E.2d 770

(1963).’ Syllabus Point 1, Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d
247 (1992).” Syl. Pt. 2, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).

               3.    “The circuit court’s function at the summary judgment stage is not to

weigh the evidence and determine the truth of the matter, but is to determine whether

there is a genuine issue for trial.” Syl. Pt. 3, Painter v. Peavy, 192 W. Va. 189, 451
S.E.2d 755 (1994).

              4.      “Pursuant to W. Va. Code § 21-5-1(c) (1987), whether fringe

benefits have then accrued, are capable of calculation and payable directly to an

employee so as to be included in the term ‘wages’ are determined by the terms of

employment and not by the provisions of W. Va. Code § 21-5-1(c).” Syl. Pt. 5, in part,

Meadows v. Wal-Mart Stores, Inc., 207 W. Va. 203, 530 S.E.2d 676 (1999).

                                               i
              5.     The determination as to whether “wages,” as defined in West

Virginia Code § 21-5-1(c) (2013 Repl. Vol.), are payable pursuant to the requirements of

West Virginia Code § 21-5-1 et seq. (2013 Repl. Vol.) is governed by the terms of the

employment agreement, whether written or in the form of a consistently applied

unwritten policy.

              6.     “‘“A motion by both plaintiff and defendant for summary judgment

under Rule 56, R.C.P. does not constitute a determination that there is no issue of fact to

be tried and if a genuine issue of material fact is involved both motions should be

denied.” Syl. pt. 3, Haga v. King Coal Chevrolet Company, 151 W.Va. 125, 150 S.E.2d
599 (1966).’ Syl. Pt. 4, Warner v. Haught, Inc., 174 W.Va. 722, 329 S.E.2d 88 (1985).”

Syl. Pt. 9, Mountain Lodge Assoc. v. Crum & Forster Indemnity Co., 210 W.Va. 536, 558
S.E.2d 336 (2001).

                                            ii
WORKMAN, Justice:

              Petitioner/plaintiff below Christopher Adkins (hereinafter “petitioner”)

appeals the Circuit Court of Kanawha County’s August 30, 2013, order granting

summary judgment to respondent/defendant below American Mine Research, Inc.

(hereinafter “AMR”) in this case brought pursuant to West Virginia Code § 21-5-1 et

seq., (2013 Repl. Vol.) the “Wage Payment and Collection Act” (hereinafter “WPCA”).

In granting summary judgment to respondent, the circuit court found that AMR’s

employment agreement with petitioner contemplated that he was paid commissions upon

shipment of products and therefore AMR did not violate the WPCA.

              Upon careful review of the briefs, the appendix record, the arguments of the

parties, and the applicable legal authority, we find that the circuit court erred in granting

respondent’s motion for summary judgment.          We therefore reverse and remand for

further proceedings below inasmuch as we find that the circuit court failed to identify the

critical factual issues requiring development and therefore erroneously entered summary

judgment.

                     I. FACTS AND PROCEDURAL HISTORY

              Petitioner was employed by AMR as an at-will sales representative from

October 1, 2000, until August 15, 2010, when he voluntarily resigned. At the beginning

of petitioner’s tenure with AMR, AMR primarily sold carbon monoxide monitoring

                                             1

systems; in 2006, it began developing and manufacturing tracking and communication

devices for miners in response to the Mine Improvement and New Emergency Response

Act of 2006. Petitioner began selling the tracking systems in 2008; however, the tracking

systems were not approved by the Mine Safety and Health Administration until

September, 2009. During the time that the tracking systems were pending approval,

petitioner sold approximately $15 million in systems and associated equipment.

Although petitioner had no written commission agreement, petitioner was customarily

paid his commissions in the month following shipment of the products he sold. The

tracking systems did not begin shipping until December, 2009. In November, 2009, just

before the tracking devices began shipping, AMR changed petitioner’s commission

structure essentially cutting his commission into a third of what he expected to receive on

sales of the tracking systems already made but not yet shipped.1 It is this alteration of his

commission structure and its application which gives rise to the suit.

              When petitioner began selling the tracking systems, his commission rate

structure was as follows: $46,000.00 in salary plus a) 1% of sales between $40,000.00

and $80,000.00; b) 2% of sales between $80,000.00 and $100,000.00; and c) 3% of sales

       1
         AMR’s fiscal year began on October 1; therefore any changes to petitioner’s
commission structure or base salary typically occurred around this time. In 2009,
however, it took AMR until November to determine exactly what his new rate structure
would be and AMR made it retroactive to October 1. Petitioner testified that, in
explanation for why his commissions were changing, he was told “you can’t make more
than the President of the company.” AMR’s President testified that “[petitioner] made a
fair amount of money for what he did. It wasn’t only him that helped sell these systems
just because it was his territory.”

                                             2

over $100,000.00 (hereinafter the “2004 rate structure”).        In November, 2009 and

retroactive to October 1, 2009, petitioner’s commission rate structure was altered as

follows: $50,000.00 in salary plus a) 0% for sales up to $300,000.00; b) 3% over

$300,000.00 with a cap of $85,000.00 (hereinafter the “2009 rate structure”).

              Petitioner concedes that he was paid the proper commission for all orders

shipped prior to October 1, 2009. Petitioner further concedes that AMR’s custom and

practice of paying commissions the month after the product shipped was agreed to and

accepted by him. Finally, petitioner concedes that, as an at-will employee, AMR had the

right to enact prospective changes to the rate structure. Petitioner, however, takes issue

with AMR’s application of the 2009 rate structure to sales made prior to that time.

Although he agrees that AMR’s payment of those commissions upon shipment was

proper, he disagrees with application of the rate structure in place at the time of

shipment—the 2009 rate structure, as opposed to the rate structure in place at the time of

sale—the 2004 rate structure.2 Allegedly as a result of this dispute, petitioner resigned in

August, 2010.

              Petitioner filed the instant action asserting 1) intentional infliction of

emotional distress; and 2) violation of the WPCA. In support of his WPCA claim,

petitioner alleges that AMR violated West Virginia Code § 21-5-4(c), which requires that

       2
         The parties disagree as to the amount which the application of the 2009 rate
structure allegedly deprived petitioner.

                                             3

“[w]henever an employee quits or resigns, the person, firm or corporation shall pay the

employee’s wages in full no later than the next regular payday.” Petitioner alleged that

upon his resignation, AMR was required to pay him the commissions which he was due

and owing by the next regular payday, specifically the amounts owing under the 2004

rate structure for items that he sold while that structure was in place. The parties filed

cross-motions for summary judgment. In short, petitioner argued that the commission

was “earned” when the sale was made; therefore, the rate structure in place at the time of

sale was applicable. Respondent argued that AMR’s “custom and practice” of paying

petitioner a month after products shipped established that their employment agreement as

to the accrual and payment of commissions contemplated that commissions were not

“earned” until the product was shipped.

              Citing an unpublished Fourth Circuit opinion, the circuit court agreed that

the WPCA “‘does not regulate the amount of wages, and it does not establish how or

when wages are earned.’” Gregory v. Forest River, Inc., 369 Fed. Appx. 464, 469 (4th

Cir. 2010). As such, the court concluded that since “the amount of wages is at issue in

this matter . . . the implied agreement and custom and business practices of Defendant . . .

do not contravene any provision of the WPCA.” The circuit court acknowledged the

“general rule” that “a person employed on a commission basis to solicit sales orders is

entitled to his commission when the order is accepted by his employer,” but found that

petitioner’s “compensation package and [] agreement therewith constitute[d] an

                                             4

exception to the ‘general rule’ such that [petitioner] was not entitled to any commission

compensation until shipment of ordered products.” This appeal followed.

                              II. STANDARD OF REVIEW

              As is well-established, “[a] circuit court’s entry of summary judgment is

reviewed de novo.” Syl. Pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).

Moreover, “‘“[a] motion for summary judgment should be granted only when it is clear

that there is no genuine issue of fact to be tried and inquiry concerning the facts is not

desirable to clarify the application of the law.” Syllabus Point 3, Aetna Casualty &

Surety Co. v. Federal Insurance Co. of New York, 148 W. Va. 160, 133 S.E.2d 770

(1963).’ Syllabus Point 1, Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d
247 (1992).” Syl. Pt. 2, Id. “The circuit court’s function at the summary judgment stage

is not to weigh the evidence and determine the truth of the matter, but is to determine

whether there is a genuine issue for trial.” Syl. Pt. 3, Id.

                                     III. DISCUSSION

              This Court has observed that the WPCA is “remedial legislation designed

to protect working people and assist them in the collection of compensation wrongly

withheld” and therefore must be construed “liberally so as to furnish and accomplish all

the purposes intended.” Mullins v. Venable, 171 W.Va. 92, 94, 297 S.E.2d 866, 869

(1982) (citation omitted); State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194

W.Va. 770, 777, 461 S.E.2d 516, 523 (1995) (citations omitted). West Virginia Code §

                                               5

21-5-4(c) provides:    “Whenever an employee quits or resigns, the person, firm or

corporation shall pay the employee’s wages in full no later than the next regular payday.”

“Wages” are statutorily defined to include commissions: “The term ‘wages’ means

compensation for labor or services rendered by an employee, whether the amount is

determined on a time, task, piece, commission or other basis of calculation.” W. Va.

Code § 21-5-1(c).

              In this case, petitioner contends that when he resigned, the accrued

commissions he claims were due and owing under the 2004 rate structure should have

been paid to him by the next pay day.             Respondent contends that petitioner was

customarily paid upon shipment, impliedly (but not expressly) arguing that the rate

structure in place at the time of shipment was used to calculate commissions, and that he

was not due and owing any additional commission upon his resignation. In support of

their positions, the parties argue two competing sets of largely extra-jurisdictional cases3

which purport to resolve the issue of when sales commissions are “earned” for purposes

of the WPCA.

              To that end, the parties do appear to agree on the applicability of the

following generally accepted rule as to entitlement to commission:

       3
        Petitioner also argues that this issue is resolved by application of the UCC
provision regarding sales; obviously, however, the UCC has no applicability to
employment relationships.

                                             6

             As a general rule, a person employed on a commission basis
             to solicit sales orders is entitled to his commission when the
             order is accepted by his employer. The entitlement to
             commissions is not affected by the fact that payment for those
             orders may be delayed until after they have been shipped.
             This general rule may be altered by a written agreement by
             the parties or by the conduct of the parties which clearly
             demonstrates a different compensation scheme.

Vector Eng’g and Mfg. Corp. v. Pequet, 431 N.E.2d 503, 505 (Ind. Ct. App. 1982)

(citations omitted). See Little v. USSC Group, Inc., 404 F. Supp. 2d 849, 854 (E.D. Pa.

2005) (“Generally . . . the terms of the contract determine when commissions are

computed and paid.”); Davis v. All American Siding & Windows, Inc., 897 N.E.2d 936,

940 (Ind. Ct. App. 2009) (“Absent some other arrangement or policy, when an employer

makes an agreement to provide compensation for services, the employee’s right to

compensation vests when the employee renders the services.” (quoting Highhouse v.

Midwest Orthopedic Institute, P.C., 807 N.E.2d 737, 739 (Ind. 2004)); Whiting-Turner

Contracting Co. v. Fitzpatrick, 783 A.2d 667, 672 (Md. 2001) (“[W]hether commissions

are to be paid or what fringe benefits attach are matters for agreement in advance of the

employment or to become a part of the undertaking during the employment.”); Hoffeld v.

Shepherd Elec. Co., Inc. 932 A.2d 1197, 1207 (Md. Ct. Spec. App. 2007) (“Whether an

employee has earned a commission depends on the terms of employment.”); Oken v.

Nat’l Chain Co., 424 A.2d 234, 235 (R. I. 1981) (“The general rule that a commission is

earned when the order is placed is not absolute; it may be altered by a written agreement

by, or the conduct of, the parties which clearly demonstrates a different compensation

scheme.”); see also 27 Am. Jur. Employment Relationship § 53 (“Generally, an

                                           7

employee’s right to a commission depends on the terms of the parties’ contract; terms

governing the payment of commissions may be a matter of agreement in advance of the

employment or become a part of the undertaking during the employment.”).

              The prevailing theme of this rule, as applied in the context of the WPCA, is

that the terms of the employment agreement will dictate when “wages” are earned for

purposes of becoming payable pursuant to the WPCA. This principle has long been

utilized in our State to determine entitlement to fringe benefits when made the subject of

a WPCA claim. In Syllabus Point 5 of Meadows v. Wal-Mart Stores, Inc., 207 W. Va.
203, 530 S.E.2d 676 (1999), this Court held, in part:

              Pursuant to W. Va. Code § 21-5-1(c) (1987), whether fringe
              benefits have then accrued, are capable of calculation and
              payable directly to an employee so as to be included in the
              term “wages” are determined by the terms of employment and
              not by the provisions of W. Va. Code § 21-5-1(c).

See Spano v. Metropolitan Life Ins. Co., 2011 WL 2180657 *3 (S.D.W. Va. 2011) (“In

WPCA cases, courts must consider the specific employment agreement.”).            This is

necessarily the case because the WPCA itself “does not create a right to compensation.

Rather, it provides a statutory remedy when the employer breaches a contractual

obligation to pay earned wages. The contract between the parties governs in determining

whether specific wages are earned.” Weldon v. Kraft, Inc., 896 F.2d 793, 801 (3d Cir.

1990); see McGough v. Broadwing Commc’ns, Inc., 177 F. Supp. 2d 289, 294 (D.N.J.

2001) (“The WPCL does not create any substantive statutory right to wages or other

forms of compensation; rather, it merely provides a statutory vehicle for employees to

                                             8

recover earned wages from an employer who has breached an underlying contractual

obligation to provide such compensation.”).

             We have further noted that the employment “agreement” may take the form

of a consistently applied unwritten policy. Ingram v. City of Princeton, 208 W. Va. 352,

357, 540 S.E.2d 569, 574 (2000); Gress v. Peterburg Foods, LLC, 215 W. Va. 32, 37,

592 S.E.2d 811, 816 (2003) (“When employers have a consistently applied unwritten

policy, employers have the protection offered by Ingram against a claim under the Wage

Payment and Collection Act.”). We therefore now hold that the determination as to

whether “wages,” as defined in West Virginia Code § 21-5-1(c) (2013 Repl. Vol.), are

payable pursuant to the requirements of West Virginia Code § 21-5-1 et seq. (2013 Repl.

Vol.) is governed by the terms of the employment agreement, whether written or in the

form of a consistently applied unwritten policy.

             In this case, of course, where the parties part ways is their characterization

of the “agreement” between petitioner and AMR as to when his commissions were

earned and therefore whether he was due and owing any unpaid commissions upon

resignation. Respondent argues, and the circuit court agreed, that the practice of paying

petitioner his commissions the month after shipment establishes that the employment

agreement contemplated that petitioner’s commissions were not earned until shipment.

Respondent further notes that if orders were cancelled before shipment, petitioner would

                                              9

not receive a commission, further evidencing their agreement that the commission was

not “earned” until shipment.4

              Petitioner, on the other hand, argues that when commissions are “payable”

is irrelevant as to the parties’ agreement as to when the commissions are “earned.”

Petitioner urges this Court to view this distinction as did the Supreme Court of Rhode

Island in a factually similar case:

              Here, [employee] conceded that he was not paid his
              commissions until the goods were shipped by [employer], but
              such a concession is not clear proof that he was in agreement
              that his commissions were not earned until shipment was
              made. Rather this arrangement was but a manifestation of

       4
         Respondent further argues heavily that two cases—an intermediate appellate case
from Illinois and the unpublished 4th Circuit opinion upon which the circuit court relied—
are determinative. In Gregory v. Forest River, Inc., 369 Fed. Appx. 464, 469 (4th Cir.
2010), a three-judge panel (2-1) found that an employer’s refusal to pay a terminated
employee all accrued commissions, rather, keeping with a monthly pay-out schedule
violated the WPCA. After correctly noting that the employment agreement governs
when wages are earned, the court summarily concluded that only shipped units created
“earned” commissions to which the employee was entitled. The court engaged in a fact-
specific analysis of the particular written commission payment schedule in that case,
none of which is applicable in this case which, in absence of a written agreement,
requires analysis of the unwritten practices and policies of AMR.

       Moreover, in Geary v. Telular Corp., 793 N.E.2d 128 (Ill. App. 2003), the
employer altered the employee’s commission plan after the employee acquired
“agreements to purchase” from clients. Although the facts of Geary are virtually
identical to those presented herein, the appellate court in Geary simply stated that “[t]here
is no issue of fact that commissions were earned when product shipped[]” with no
discussion as to how or why it reached such conclusion. Id. at 133. Accordingly, we find
these cases to be of little persuasive value as to the facts and issues as presented in this
case.

                                             10

              [employer’s] accounting procedures in regard to when
              commissions would be paid.

Oken, 424 A.2d at 236 (second emphasis added). Petitioner, therefore, argues that he and

AMR had no “agreement” as to which commission rate structure was applied to

commissions paid and that the “general rule” that a commission is earned at the time of

sale must prevail.

              It is on this point that the record is frustratingly silent. Respondent offers

no evidence of what the parties’ course of conduct was relative to which rate structure

was used to calculate commissions when they were finally paid upon shipping; rather,
                                                                                           5
respondent myopically focuses on simply “when” commissions were paid.

       5
         Respondent argues that since petitioner conceded that he was paid “properly” up
until October, 2009, he has conceded that he was always paid in the manner respondent
urges, i.e. based upon the rate schedule in place upon shipment:

       Q.	    Up until, say 2010, were your payments, your salary, your commissions,
              your vehicle, were they all paid properly as far as you know?

       A.     Up until 2009.
***
       Q.	    If they shipped before October 1st and you were paid commissions, are you
              claiming that you were paid correctly?

       A.	    Yes. I would have been paid correctly.

      This may in fact be a critical concession if the record clearly reflected how those
“properly” paid commissions were calculated in situations where an intervening
commission change occurred between sale and shipment. Unfortunately, the record is
unclear as to how petitioner’s commission was calculated prior to October 2009; rather,
respondent focuses exclusively on when it was paid.

                                            11

Respondent’s silence on this issue is particularly peculiar inasmuch as petitioner twice

appears to concede in his briefs that new commission structures were in fact utilized to

calculate commissions on sales which pre-dated the change in certain instances.6 Despite

this apparent concession, neither party explored these instances in the record below and

therefore fail to offer any evidence upon which this Court could make a determination as

to what the employment agreement contemplated as to how commissions were

calculated, i.e. whether they were calculated using the rate structure in place upon sale or

upon shipping. It is this determination that informs the issue of what the parties agreed

relative to when commissions were “earned.”

              To that end, despite the parties’ cross-motions for summary judgment, we

find that the circuit court erred in failing to identify the critical issues of fact which must

necessarily guide its application of the law. That is, the record is devoid of evidence

regarding the parties’ course of conduct as to how commission payments were calculated

where there was an intervening change in commission structure.                   This factual

development is critical to a determination as to what the consistently applied unwritten

       6
         In petitioner’s brief, he states, “AMR had at times made new compensation
schemes retroactive, thus providing Adkins with something akin to a bonus[.]” Again in
his reply brief, he states, “AMR had on occasion applied the new commission structure to
pending commission payments giving Adkins something akin to a bonus.” The
implication of these statements is that where petitioner’s commission increased between
the sale and shipment, he was paid the increased amount, i.e. the rate structure in place
upon shipment as contended by respondent. Again, however, we find no evidence in
support of these statements in the record which may either clarify these statements or
confirm them.

                                              12

policy was as to commission calculation.           Clearly, the parties disagree as to how

commissions were calculated; the circuit court improperly focused on when the

commissions were paid and therefore improperly determined there was no genuine issue

of fact.

              “‘A motion by both plaintiff and defendant for summary
              judgment under Rule 56, R.C.P. does not constitute a
              determination that there is no issue of fact to be tried and if a
              genuine issue of material fact is involved both motions should
              be denied.’ Syl. pt. 3, Haga v. King Coal Chevrolet Company,
              151 W.Va. 125, 150 S.E.2d 599 (1966).” Syl. Pt. 4, Warner v.
              Haught, Inc., 174 W.Va. 722, 329 S.E.2d 88 (1985).

Syl. Pt. 9, Mountain Lodge Assoc. v. Crum & Forster Indemnity Co., 210 W.Va. 536, 558
S.E.2d 336 (2001). As we observed in Marcus v. Staubs, 230 W.Va. 127, 141, 736
S.E.2d 360, 374 (2012), “the mere fact that the parties seemingly agreed that there were

no disputed issues of material fact does not constrain the trial court to accept that

representation as true and enter summary judgment for one of the parties.”            See

Robertson v. Opequon Motors, Inc., 205 W. Va. 560, 519 S.E.2d 843 (1999) (finding no

error in WPCA case where court refused to set aside verdict due to conflicting evidence

presented about how commissions were calculated); Saunders v. Tri-State Block Corp.,

207 W. Va. 616, 620, 535 S.E.2d 215, 219 (2000) (finding summary judgment improper

in WPCA case where “further inquiry concerning the facts [was] desirable to clarify

application of the law”).

                                             13

                                  IV. CONCLUSION

             For the reasons set forth above, this Court reverses the August 30, 2013,

order of the Circuit Court of Kanawha County granting summary judgment in favor of

respondent and remands this case for further proceedings consistent with this opinion.

                                                                 Reversed and remanded.

                                           14