Court Opinion

ID: 3150841
Source: CourtListenerOpinion
Date Created: 2015-10-30 00:00:48.739753+00
Date Added: 2024-06-11T11:55:32.508599
License: Public Domain

Case: 15-40563      Document: 00513252308         Page: 1    Date Filed: 10/29/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                           United States Court of Appeals
                                                                                    Fifth Circuit

                                    No. 15-40563                                  FILED
                                  Summary Calendar                         October 29, 2015
                                                                             Lyle W. Cayce
                                                                                  Clerk
MONICA CORDERO,

                     Plaintiff-Appellant,
v.

AVON PRODUCTS, INC.,

                     Defendant-Appellee.

                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 7:13-CV-470

Before KING, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM:*
       In this employment case, Monica Cordero appeals from the district
court’s grant of summary judgment, and denial of Cordero’s partial motion for
summary judgment, in favor of Avon Products, Inc. (Avon) on Cordero’s claims
for breach of contract and fraud. We affirm.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 15-40563       Document: 00513252308     Page: 2   Date Filed: 10/29/2015

                                    No. 15-40563
                                          I
         In 2012, Cordero was hired by Avon for the position of District Sales
Manager (DSM) for Avon District No. 1803, located within Avon’s “Texan
Division.”     A DSM’s responsibilities include training, incentivizing, and
developing       Independent     Sales    Representatives     (ISRs)—independent
contractors who purchase Avon products for resale to their customer base—to
maximize the district’s performance. Under Avon’s Sales Leadership program,
participating ISRs, titled “Sales Leaders,” undertook the additional
responsibility to recruit new ISRs. As a DSM, Cordero was eligible to earn
bonuses based on sales, orders, and recruiting activities achieved by ISRs and
Sales Leaders in her district pursuant to Avon’s Incentive Compensation Plan
(ICP).
         In April 2013, Avon furnished recruitment and sales reports to Cordero
detailing her district’s productivity for the first quarter of 2013. According to
Cordero, these reports indicated that Cordero was due a $70,850 bonus.
Shortly thereafter, however, Avon learned that certain Sales Leaders in the
Texan Division had fabricated recruiting and sales activities. Specifically, the
Sales Leaders created fictitious accounts for persons they claimed to have
recruited as new ISRs and placed fake orders on credit from those individual’s
accounts.     This dishonest activity resulted in orders for $450,000 of Avon
products for which Avon claims it did not get paid. Though both parties agree
that Cordero was not involved in the dishonest activity, Cordero has
acknowledged that it occurred.
         Because the feigned activity falsely inflated the productivity of Cordero’s
district, Avon adjusted the performance numbers, and Cordero’s bonus
calculated therefrom, to reflect only legitimate sales and recruiting. As a
result, Avon paid Cordero a $1,200 bonus based on the sales for which Avon
received payment. Cordero nevertheless contends that pursuant to the ICP,
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she was due $70,850, calculated from all activity published in the
aforementioned reports.
       This dispute resulted in Cordero’s filing claims against Avon for breach
of contract, fraud, and negligence. While she originally brought suit in state
court, Avon properly removed the action to federal court on the basis of
diversity jurisdiction.         Cordero subsequently moved for partial summary
judgment on her breach of contract claim, and Avon moved for summary
judgment on all of Cordero’s claims. After a pre-trial hearing on the motions,
the district court granted Avon’s motion for summary judgment “for the
reasons stated on the record” and dismissed the suit. Cordero timely appealed
the district court’s judgment regarding her claims for breach of contract, fraud
by false promise, and fraud by non-disclosure.
                                                II
       We review the district court’s grant of summary judgment in favor of
Avon de novo, “applying the same standard as the district court.” 1 A party is
entitled to summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” 2 The parties’ motions are considered independently, “viewing
the evidence and inferences in the light most favorable to the nonmoving
party.” 3
                                               III
       Under Texas law, applicable to this diversity action, the elements in a
breach of contract claim include: “(1) the existence of a valid contract; (2) that

       1Potts v. Chesapeake Exploration, L.L.C., 760 F.3d 470, 473 (5th Cir. 2014) (citation
omitted).
       2 Rogers v. Bromac Title Servs., L.L.C., 755 F.3d 347, 350 (5th Cir. 2014) (quoting FED.
R. CIV. P. 56(a)).
       3   Ford Motor Co. v. Tex. Dep’t of Transp., 264 F.3d 493, 498 (5th Cir. 2001).
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the plaintiff performed or tendered performance; (3) that the defendant
breached the contract; and (4) that the plaintiff was damaged as a result of the
breach.” 4       In dispute is the third element, whether Avon breached the
employment agreement—namely, the bonus provisions of the ICP.
       The crux of the parties’ dispute is contract interpretation.                  Cordero
alleges breach insofar as Avon adjusted her bonus to exclude fictitious sales
and recruiting activity.          Because the ICP speaks only of “sales,” but not
“legitimate sales,” and does not specifically exclude “sales manufactured by
fraud,” Cordero reads Avon’s bonus provisions to trigger a bonus when
products are ordered, shipped, and notated on Avon’s quarterly report, as
occurred here. According to Cordero, a jury could conclude that Avon, due to
its alleged poor credit policies, should bear the financial consequences of non-
payment. Avon responds that it is entitled to summary judgment as a matter
of law because the bonus provisions only applied to legitimate sales “achieved,”
i.e. sales resulting in payment.
       The ICP is a chart that identifies sales, order, and leadership goals
necessary to trigger specific bonus awards. The grid lists quarterly awards for
“Sales Plan Achievement” and “Leadership Plan Achievement.”                               The
Administrative Guidelines, which define the terms, provide in relevant part:
       6. Leadership Bonus – Consists of 2 components – Total Upline
       Growth target achievement paid quarterly when 100% of Total
       Upline target is met and includes a New to Title component that
       is earned . . . when 100% of Total Leadership Upline target is met.
        ....
       10. Quarterly Sales Bonus – Paid quarterly if commissionable
       sales achievement is at least 95% and 95% quarterly order count
       plan is achieved.

       4    Frost Nat’l Bank v. Burge, 29 S.W.3d 580, 593 (Tex. App.—Houston [14th Dist.] 2000,
no pet.).
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         11. Quarterly Orders Bonus – Paid quarterly if 100% of orders
         count plan is achieved.

             “Whether a contract is ambiguous is a question of law for the court to
decide.” 5 “A contract is not ambiguous if it can be given a definite or certain
meaning as a matter of law.” 6 However, a contract is ambiguous if subject to
two or more interpretations, though “both interpretations must be
reasonable.” 7 Ambiguity creates a fact issue for the jury; but, if a contract is
unambiguous, “we give the contract its plain grammatical meaning.” 8
             We agree with the district court that “commissionable sales,” as
referenced in the Administrative Guidelines, is unambiguous and refers to
legal sales, “as opposed to those that were a product of some fraudulent
representation.”           Black’s Law Dictionary defines “sale” to include four
elements: “(1) parties competent to contract, (2) mutual assent, (3) a thing
capable of being transferred, and (4) a price in money paid or promised.” 9
Here, we have neither parties competent to contract, as the orders were placed
on behalf of fictitious individuals, nor mutual assent. When Avon shipped the
orders, they operated under the assumption that the order was a bargained-for
exchange between itself and a real buyer, for payment.
             Reading the Guidelines as a whole, we similarly hold that the terms
“achieved” and “met” necessarily refer to bona fide sale, order, and recruiting
activity. Achieve means “to be successful in doing something,” “to attain a

         5   Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 280, 282 (Tex. 1996).
         6   Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex.
1996).
         7   Id. (emphasis in original).
         8   Friendswood, 926 S.W.2d at 283.
         9   Sale, BLACK’S LAW DICTIONARY (10th ed. 2014).
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desired end or level of performance,” or “to strive, make an effort.” 10 “Met” as
referred to in the leadership bonus provision, operates in a synonymous
fashion. It strains credulity, and is thus unreasonable, to read the bonus
provisions to apply to the wholly fabricated activity at issue here. The culpable
Sales Leaders made no effort to attain the desired end: business for themselves
and Avon.
        We further dispense with Cordero’s argument regarding Avon’s failure
to present evidence of Cordero’s involvement in the dishonest conduct. We
reiterate that Avon concedes Cordero was not a party to the dishonest conduct.
Even so, neither Cordero’s lack of culpability, nor her inability to approve sales,
credit lines, or shipments, is material to her bonus entitlement. 11 Though
Cordero is correct that her bonus was intended to be a reflection of her
“individual performance,” as intimated in her offer letter, Cordero’s “individual
performance” is inextricably tied to the performance of her district—namely,
the ISRs’ sales, orders, and recruiting activities—given her role as DSM. The
interpretive issue is whether the commissionable sales, orders, and recruiting
efforts targets were achieved or met.               That Cordero disagrees in her
interpretation does not render the terms ambiguous. 12
        Due to our determination that Cordero was only entitled to a bonus
derived from legitimate sales and recruiting efforts as a matter of law, we
further hold that Cordero has failed to raise a genuine issue of material fact as
to whether Avon breached the ICP. The summary judgment record shows that

       10OXFORD ENGLISH DICTIONARY ONLINE, http://www.oed.com/view/Entry/1480 (last
visited Oct. 28, 2015).
       11 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (“[T]he substantive law will
identify which facts are material. Only disputes over facts that might affect the outcome of
the suit under the governing law will properly preclude the entry of summary judgment.”).
       12   Columbia Gas Transmission, 940 S.W.2d at 589.
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Avon paid Cordero a bonus on legitimate sales, excluding “the fraudulent sales,
orders and recruiting efforts that did not actually exist.” Cordero admits that
she was paid $1,200 and has acknowledged the existence of the fraudulent
activity in her district multiple times. To the extent Cordero now, for the first
time, seeks to raise a fact issue as to the exact “percentage or dollar amount of
the subject sales, if any, which were procured by fraud,” that argument is
waived. It is clear that “[p]laintiffs may not advance on appeal new theories
or raise new issues not properly before the district court to obtain reversal of
the summary judgment.” 13
        Accordingly, based on our review of the summary judgment record and
the parties’ arguments, we hold that the district court properly granted
summary judgment to Avon on Cordero’s claim for breach of contract.
                                                IV
       Cordero also appeals her claims of fraud by false promise and fraud by
non-disclosure. The district court implicitly ruled on Cordero’s fraud claims
when it granted Avon’s Motion for Complete Summary Judgment and
dismissed the suit. 14
       Under Texas law, a fraud claim requires a “material misrepresentation,
which was false, and which was either known to be false when made or was
asserted without knowledge of its truth, which was intended to be acted upon,
which was relied upon, and which caused injury.” 15 Cordero’s claims of fraud
by false promise and fraud by non-disclosure are theories by which the

       13Dunbar v. Seger-Thomschitz, 615 F.3d 574, 576 (5th Cir. 2010) (citing Little v.
Liquid Air Corp., 37 F.3d 1069, 1071 (5th Cir. 1994) (en banc) (per curiam)).
       14   See, e.g., Babb v. Dorman, 33 F.3d 472, 476 n.6 (5th Cir. 1994).
       15 Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41,
47 (Tex. 1998) (quoting Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 1994)
(per curiam)).
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misrepresentation element of fraud can be proven. 16 Fraud by false promise
involves “[a] promise to do an act in the future . . . when made with the
intention, design and purpose of deceiving, and with no intention of performing
the act.” 17 Fraud by non-disclosure is premised on the notion that silence “may
be as misleading as a positive misrepresentation of facts.” 18                    To survive
summary judgment, Cordero must present sufficient evidence to create a
genuine issue of material fact as to each element of fraud. 19
       Cordero alleges that Avon committed fraud by false promise when Avon
unqualifiedly promised to pay Cordero pursuant to the ICP, yet did not intend
to do so with respect to orders for which Avon did not receive payment. Though
Avon contends that Cordero did not appeal the judgment as to fraud by false
promise because Cordero did not list it as an issue for appeal, Cordero did brief
the claim and we thereby reach it. 20
       Cordero has offered no evidence, other than her own interpretation of the
ICP, to support her allegation that Avon’s promise to pay her according to the
ICP was false, much less intentionally false. Nor did Cordero allege in her
affidavit that she relied upon Avon’s alleged misrepresentation when she
accepted the DSM position. As such, Cordero’s evidence is insufficient to
preclude summary judgment on her fraud by false promise claim.
       Nor can Cordero survive summary judgment as to her non-disclosure
theory of fraud. Cordero asserts that Avon failed to disclose that Avon “had

        See Columbia/HCA Healthcare Corp. v. Cottey, 72 S.W.3d 735, 745 (Tex. App.—
       16

Waco 2002, no pet.).
       17   Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 435 (Tex. 1986).
       18   Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997).
       19Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also, e.g., In re Segerstrom,
247 F.3d 218, 224-27 (5th Cir. 2001).
       20See Jimenez v. Wood County, 621 F.3d 372, 379 n.4 (5th Cir. 2010), aff’d en banc,
660 F.3d 841 (5th Cir. 2011).
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prior experience with the kinds of activities it now calls fraud, that [Avon] had
done nothing . . . to prevent such fraud from recurring, and that such fraud
could adversely affect [Cordero’s] bonuses.”
       Under Texas law, fraud by non-disclosure is only implicated when a
party has a duty to speak, yet deliberately remains silent. 21 “Whether such a
duty exists is a question of law.” 22 Cordero has offered no authority, and we
found none, indicating that Avon owed a duty to make the cited disclosures to
Cordero as a prospective employee. 23 This alone merits summary judgment in
favor of Avon as a matter of law, as “a complete failure of proof concerning an
essential element of the non-moving party’s case necessarily renders all other
facts immaterial.” 24
       But even assuming such duty existed, Cordero failed to provide sufficient
evidence to show that the non-disclosures were material, 25 that Avon intended
for Cordero to rely on the non-disclosures, or that Cordero did, in fact, rely
upon them in accepting the DSM position. That Avon dealt with fraudulent
accounts and orders in the past, of which Cordero provides limited evidence,
does not create a material fact issue as to whether Avon intentionally withheld
such information. 26 Though Cordero states in her affidavit that Avon informed

       21 Bradf. v. Vento, 48 S.W.3d 749, 755-56 (Tex. 2001).
       22   Id. at 755.
       23 See Ins. Co of N. Am. v. Morris, 981 S.W.2d 667, 674 (Tex. 1998) (“Generally no duty
of disclosure arises without evidence of a confidential or fiduciary relationship.”); see also
Bradford, 48 S.W.3d at 755 (“Several courts of appeals have held that a general duty to
disclose information may arise in an arm’s-length business transaction when a party makes
a partial disclosure that, although true, conveys a false impression.”).
       24   Celotex Corp., 477 U.S. at 323.
       25 Am. Med. Int’l, Inc. v. Giurintano, 821 S.W.2d 331, 338 (Tex. App.—Houston [14th
Dist.] 1991, no writ) (“Material means a reasonable person would attach importance to and
would be induced to act on the information in determining his choice of actions in the
transaction in question.”).
       26   See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
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her that bonuses were a large part of DSM compensation, she does not contend
that she accepted employment on the assumption that her bonuses would
reflect illegitimate sales and recruiting activity.
       In sum, the scant evidence to which Cordero points the court is
insufficient to enable a reasonable jury to render a verdict in her favor. 27 While
we must construe the evidence in the light most favorable to Cordero, the
non-movant, we cannot, “in the absence of any proof, assume that [she] could
or would prove the necessary facts.” 28
                                        *         *       *
       For the foregoing reasons, we AFFIRM the district court’s grant of
summary judgment in favor of Avon. Cordero’s alternative motion for oral
argument which was carried with the case is DENIED.

       27 See McFaul v. Valenzuela, 684 F.3d 564, 571 (5th Cir. 2012) (“Summary judgment
may not be thwarted by conclusional allegations, unsupported assertions, or presentation of
only a scintilla of evidence.”).
        Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam)
       28

(emphasis omitted).
                                             10