Court Opinion

ID: 4326561
Source: CourtListenerOpinion
Date Created: 2018-11-01 12:09:38.225986+00
Date Added: 2024-06-11T14:46:58.577546
License: Public Domain

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17-P-30                                             Appeals Court

             OLIVER C. BIEWALD vs. SEVEN TEN STORAGE
                     SOFTWARE, INC., & others.1

                            No. 17-P-30.

          Essex.    December 4, 2017. - October 31, 2018.

             Present:   Green, Maldonado, & Kinder, JJ.

Massachusetts Wage Act. Contract, Employment, Performance and
     breach, Construction of contract, Condition precedent,
     Implied covenant of good faith and fair dealing. Practice,
     Civil, Judgment notwithstanding verdict, Summary judgment,
     Costs. Employment, Retaliation.

     Civil action commenced in the Superior Court Department on
October 18, 2012.

     A motion for summary judgment was heard by Robert N.
Tochka, J.; the case was tried before Diane M. Kottmyer, J.; a
motion for judgment notwithstanding the verdict was heard by
Kottmyer, J.; and a motion for costs was considered by Kottmyer,
J.

     Sarah A. Catignani for the plaintiff.
     Bradley L. Croft (Michael J. Duffy also present) for the
defendants.

     1 Seven Ten Storage Software, LLC; Brojaban, Inc.; Robert J.
Moulton; James F. Moulton; and Gary J. LaFreniere.
                                                                      2

     MALDONADO, J.    Oliver C. Biewald commenced this action

against his former employer, Seven Ten Storage Software, Inc.,

now known as Brojaban, Inc., and Seven Ten Software, LLC

(collectively, Seven Ten), and several of its executives

asserting a variety of claims related to the nonpayment of sales

commissions.     A Superior Court judge dismissed most of those

claims on the defendants' motion for summary judgment.     A second

judge then presided over a trial of the remaining claims, at the

conclusion of which the jury found largely in favor of Biewald

and awarded him damages for violations of the Wage Act, G. L.

c. 149, § 148, and breach of his employment agreement.     In

response to the defendants' motion for judgment notwithstanding

the verdict, however, the trial judge, who had reserved ruling

on the defendants' motions for a directed verdict during the

trial, vacated the verdict and ordered judgment for the

defendants.     The judge concluded that Biewald's claims were

barred by the unambiguous provisions of his employment

agreement.     She further concluded that, even assuming the

employment agreement was ambiguous, the verdict could not be

sustained on any reasonable view of the evidence.     On appeal

from the final judgment, Biewald challenges that ruling and the

dismissal of certain claims on summary judgment.2    He also

     2 Biewald does not challenge on appeal the motion judge's
decision on several of his claims.
                                                                  3

appeals from a postjudgment order awarding costs to the

defendants.   We affirm.

    Background.   On June 22, 2007, Seven Ten, a "startup"

company that developed and marketed data storage software,

entered into a written agreement (employment agreement) with

Biewald to employ him as vice president of strategic sales.

Under the terms of the employment agreement, Biewald was

entitled to an annual salary of $60,000 and to commissions as

follows:

    "3.4 Commissions. The Employee shall receive payment for
    any sale, purchase, transfer, or contract for the services,
    licenses, and/or products -- for internal use, distribution
    or for resale -- of Employer products/services ('Sale') to
    the companies defined in and agreed upon in the attached
    Exhibit A (Exclusive List) at such time as any
    consideration for such sale is provided to Employer,
    whether in the form of purchase orders, promissory notes,
    letters of intent, monies, cash, stock, options for stock,
    or any other consideration in any form whatsoever
    ('Consideration'); the commission shall be 50% (fifty
    percent) of said sale. . . .

    "3.4.1 Guaranteed contracts. For all
    OEM/Partner/Reseller/Distributor contracts signed with a
    committed and guaranteed revenue stream to Employer,
    Employee shall receive, in addition to the commissions
    stated in Section 3.4, Five Percent (5%) of the guaranteed
    revenue payable upon execution of such agreement.
    Commissions on contract hereunder will be paid upon receipt
    of payment by OEM/Partner/Reseller/Distributor."

The employment agreement had no defined term and instead

provided that Biewald was an at-will employee, who could be

terminated at any time, with or without cause.   Upon such

termination, the employment agreement further provided, in
                                                                        4

section 2, that only certain sections of the employment

agreement would survive.    Sections 3.4 and 3.4.1 were not

included among those sections.

     Approximately two years later, on September 2, 2009, Seven

Ten, through Biewald's efforts, entered into a distributor

agreement (EMC contract) with EMC Corporation (EMC) that fell

within section 3.4 of Biewald's employment agreement.        However,

because the EMC contract did not provide Seven Ten with a

committed or guaranteed revenue stream, it did not qualify as a

"guaranteed contract" under section 3.4.1 of the employment

agreement.3    In fact, while EMC had the right under the EMC

contract to make purchases from Seven Ten, it was not obligated

to do so.     The only way that Seven Ten could realize revenue

under the EMC contract was if EMC subsequently chose to submit a

purchase order.     Theoretically, the EMC contract could expire

without EMC ever having submitted an order.     Seven Ten,

meanwhile, was obligated to pay EMC $51,000 over the term of the

EMC contract for admittance to EMC's so-called "Select" program.

     At the time, Seven Ten was, like many companies, struggling

in the wake of the worldwide financial crisis and facing an

uncertain future unless it could secure a fresh infusion of

     3 Biewald never secured a guaranteed contract or qualified
for a commission under section 3.4.1, but he did qualify for
commissions under section 3.4 on over forty occasions.
                                                                   5

capital.   In the summer of 2009, a new investor -- an "angel"

investor -- had surfaced.   The new investor conditioned its

investment on Seven Ten's implementation of various changes,

including the reform of existing employment contracts.    On

October 9, 2009, therefore, Seven Ten notified Biewald that his

employment agreement was being terminated, effective at the end

of that month.

    Seven Ten also expressed a desire to retain Biewald's

services, if new employment terms could be agreed upon.   In the

meantime, it agreed to increase Biewald's annual salary to

$75,000 but reduced his commission rate in stages (forty per

cent for November, thirty per cent for December, and ten per

cent on and after January 1, 2010), effective November 1, 2009.

    Over the following weeks, Biewald and Seven Ten engaged in

negotiations, with Biewald primarily expressing concern over

whether he would still be paid commissions he believed he had

already earned under section 3.4 of the employment agreement.

On November 24, 2009, with no new employment agreement in place,

Seven Ten notified Biewald that, forthwith, it was further

reducing his compensation to salary only, with no commissions.

Then, on December 2, 2009, after a meeting that again failed to

result in an agreement, Seven Ten terminated Biewald's

employment altogether, effective the same day.
                                                                    6

    Subsequently, Seven Ten paid Biewald commissions based on

the new forty per cent rate imposed as of November 1, 2009, on

two EMC-related purchase orders received on November 20 and 24,

2009.   There was also a third EMC-related purchase order

received on November 30, 2009, on which Seven Ten refused to pay

any commission, citing the "salary only" compensation terms

imposed as of November 25, 2009.   Seven Ten also refused to pay

Biewald for any EMC-related purchase orders received after the

December 2, 2009, employment termination date.

    In response, Biewald filed a wage complaint with the

Attorney General's office and then commenced this action,

claiming, inter alia, that he was entitled, under section 3.4 of

the employment agreement, to be paid a fifty per cent commission

on all EMC-related purchase orders, whether they were received

before or after the termination of his employment.   The jury

agreed with Biewald and awarded him $10,730 under the Wage Act

based on the balance due for commissions on the November 20, 24,

and 30, 2009, purchase orders, and $807,376 under the employment

agreement for unpaid commissions on EMC-related purchase orders

received after December 2, 2009.   However, the trial judge

vacated the verdict and ordered judgment for the defendants.

This appeal followed.

    Analysis.   1.   Judgment notwithstanding the verdict.    a.

Standard.   A ruling on a motion for judgment notwithstanding the
                                                                      7

verdict presents a question of law that we review under the same

standard as the trial judge, construing the evidence in the

light most favorable to the nonmoving party -- here, Biewald.

O'Brien v. Pearson, 449 Mass. 377, 383 (2007).    The standard is

whether the evidence, construed against the defendants,

justifies the jury verdict against them.    Id.   "Our duty in this

regard is to evaluate whether anywhere in the evidence, from

whatever source derived, any combination of circumstances could

be found from which a reasonable inference could be made in

favor of [Biewald]" (quotation omitted).    Id.

     b.   Determination of ambiguity.   Biewald first argues that

the trial judge erred when she determined that the employment

agreement unambiguously extinguished any right he might have had

under section 3.4 to collect commissions on EMC-related purchase

orders received after the employment agreement was terminated.

The interpretation of a contract, including the determination

regarding ambiguity, presents a question of law for the court,

subject on appeal to de novo review.    See Balles v. Babcock

Power Inc., 476 Mass. 565, 571 (2017).4    The rules of

interpretation are well established.    "To answer the ambiguity

question, the court must first examine the language of the

     4 Given the de novo nature of our review, we need not
address Biewald's claim that the trial judge based her ambiguity
determination, in part, on language that does not appear in the
employment agreement.
                                                                      8

contract by itself, independent of extrinsic evidence concerning

the drafting history or the intention of the parties."      Bank v.

Thermo Elemental Inc., 451 Mass. 638, 648 (2008).   "The words of

a contract must be considered in the context of the entire

contract rather than in isolation. . . .    When the words of a

contract are clear, they must be construed in their usual and

ordinary sense . . . ."   General Convention of the New Jerusalem

in the U.S. of Am., Inc. v. MacKenzie, 449 Mass. 832, 835

(2007).   "[A]n ambiguity is not created simply because a

controversy exists between the parties, each favoring an

interpretation contrary to the other."    Boazova v. Safety Ins.

Co., 462 Mass. 346, 351 (2012), quoting Citation Ins. Co. v.

Gomez, 426 Mass. 379, 381 (1998).   "Language is ambiguous where

the phraseology can support a reasonable difference of opinion

as to the meaning of the words employed and the obligations

undertaken" (quotation omitted).    Ferri v. Powell-Ferri, 476

Mass. 651, 654 (2017).

    According to Biewald, the language of section 3.4 of the

employment agreement is reasonably susceptible to more than one

interpretation, thereby rendering it ambiguous.   Specifically,

he contends that one reasonable interpretation is that his right

to a commission vested the moment he made a "Sale," and that

only his right to payment of that commission had to await Seven

Ten's receipt of "Consideration."   In the case of the EMC
                                                                    9

contract, therefore, he contends his right to a commission

vested the moment the EMC contract was executed on September 2,

2009, while only his right to payment of that commission had to

wait until EMC provided a purchase order.    We disagree.

     There is no distinction in section 3.4 of the employment

agreement between a right to a commission and a right to be paid

a commission.    The plain language provides that Biewald was

entitled to be paid a commission on a "'Sale' . . . at such time

as any consideration for such sale [was] provided to [Seven

Ten]."   Clearly, there were two conditions precedent, a "Sale"

and "Consideration."   And, whether one views it as a right to a

commission or a right to be paid a commission, that right did

not arise (or vest) until both conditions were satisfied.     The

employment agreement also plainly provided, in section 2, that

only certain sections of the employment agreement survived

termination.    Section 3.4 was not one of those sections.

Whatever rights Biewald had under section 3.4, therefore, did

not survive unless there had already been a "Sale" accompanied

by "Consideration."

     Even assuming, as we do, that the EMC contract qualified as

a "Sale" under section 3.4 of the employment agreement,5 it is

     5 While the defendants suggest otherwise, there is a
reasonable argument that the EMC contract was a "contract for
the services, licenses, and/or products -- for internal use,
distribution or for resale -- of [Seven Ten] products/services."
                                                                  10

undisputed that no "Consideration" was provided at the time the

EMC contract was executed.   EMC did not commit to make any

purchases from Seven Ten and only became obligated to pay Seven

Ten if and when EMC submitted a subsequent purchase order.

"Consideration," therefore, was provided, and Biewald's

commission rights vested, only when a purchase order was

submitted.   Therefore, once Biewald's employment agreement was

terminated, he was entitled to commissions in the rates

specified under that agreement only for those purchase orders

submitted, with consideration, on or before October 31, 2009.

We conclude, therefore, that under the plain language of the

employment agreement, Biewald was not entitled to commissions at

the rates provided under section 3.4 on the November 20, 24, or

30, 2009, purchase order, or on any EMC-related purchase orders

received thereafter.   The jury verdict, therefore, could not

stand.6

     c.   Assuming an ambiguity.   Biewald further argues that the

trial judge erred when she determined that, even if the

employment agreement was ambiguous, the jury verdict was not

supported by any view of the evidence.   However, Biewald has not

     6 Contrary to Biewald's assertion, the defendants adequately
relied on the language of sections 2 and 3.4 of the employment
agreement when they moved for a directed verdict. The argument,
therefore, was not waived.
                                                                      11

identified, and we have not located, any extrinsic evidence that

supports his interpretation of the employment agreement.7     Even

assuming an ambiguity, therefore, he failed to sustain his

burden of proof, and judgment notwithstanding the verdict

properly issued for the defendants.

     2.   Summary judgment.   a.   Standard.   We review a decision

to grant summary judgment de novo, construing all facts in favor

of Biewald as the nonmoving party.    See Miller v. Cotter, 448

Mass. 671, 676 (2007).   The defendants, as the moving parties,

have the burden of establishing that there is no genuine issue

as to any material fact and that they are entitled to judgment

as a matter of law.   See Drakopoulos v. U.S. Bank Nat'l Ass'n,

465 Mass. 775, 777 (2013).

     b.   Retaliation.   Biewald argues that the motion judge

erred by granting summary judgment to the defendants on his

claim (count II) that the defendants violated G. L. c. 149,

§ 148A, by retaliating against him after he had expressed

concerns about payment for earned commissions.     "Lacking any

direct evidence of a retaliatory motive, [Biewald] had the

     7 Instead, Biewald merely notes that the jury obviously
agreed with his interpretation. He further argues that the jury
were entitled to construe the employment agreement against Seven
Ten as the drafter. See James B. Nutter & Co. v. Estate of
Murphy, 478 Mass. 664, 669 (2018). However, Biewald actually
prepared the initial draft employment agreements, including the
language that ended up forming the basis for section 3.4.
                                                                   12

burden of establishing a prima facie case of retaliation, and,

in the wake of the defendants' introduction of nonretaliatory

reasons for the various actions taken, the burden of proving

that the articulated nonretaliatory reasons were pretext."       Mole

v. University of Mass., 442 Mass. 582, 591 (2004).

    To make out a prima facie case, Biewald "had to show that

[he] engaged in protected conduct, that [he] suffered some

adverse action, and that 'a causal connection existed between

the protected conduct and the adverse action.'"    Verdrager v.

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., 474 Mass.

382, 406 (2016), quoting Mole, 442 Mass. at 591-592.    Even

assuming that Biewald could satisfy the first two elements,

however, he could not satisfy the third.   Contrary to Biewald's

assertions, a causal connection cannot be inferred in this case

from the timing and sequence of events.    Rather, the critical

adverse action -- the October 9, 2009, notice of the upcoming

termination of the employment contract that Biewald claimed gave

him a right to vested commissions -- does not postdate any

alleged protected activity.

    Still, Biewald contends that, after he raised his concerns,

the defendants went on to reduce his commission rate, eventually

reduce his compensation to "salary only," and then terminated

his employment altogether.    Because these actions came after

Biewald protested the loss of compensation, we apply the
                                                                    13

familiar three-part test for determining whether his termination

was for an improper motive.   Verdrager, 474 Mass. at 406.     We

assume that the timing of the adverse action was sufficient to

make out Biewald's prima facie case.    See id. at 409

("[T]emporal proximity . . . is one form of 'circumstantial

evidence that . . . . can demonstrate' the required causal

connection").   The defendants presented evidence in support of

their claim that they took these actions only because they could

not come to terms with Biewald on a new employment agreement.

Biewald claims that this reason was pretextual, but as the judge

aptly noted, the defendants were not required to retain Biewald,

an at-will employee, indefinitely and on his terms.      On this

unique factual record, therefore, the defendants were entitled

to summary judgment.

    c.   Good faith and fair dealing.    Biewald further argues

that his claim (count VII) for breach of the implied covenant of

good faith and fair dealing should have survived summary

judgment given his assertion that Seven Ten terminated the

employment agreement to deprive him of commissions under the EMC

contract.   See Fortune v. National Cash Register Co., 373 Mass.

96, 104-105 (1977).    Seven Ten, however, offered evidence of a

legitimate business reason for terminating the employment

agreement, namely, to satisfy the demands of the "angel"

investor.   Biewald, in turn, has not offered any evidence that
                                                                  14

calls that explanation into question.     Summary judgment was

therefore proper on this count.     See York v. Zurich Scudder

Invs., Inc., 66 Mass. App. Ct. 610, 618 (2006) (whether

termination was for good cause typically presents question of

fact for jury, but not if it is undisputed that action was

"reasonably related, in the employer's honest judgment, to the

needs of [its] business" [quotation omitted]).

    3.   Costs.     Finally, Biewald appeals from the trial judge's

order awarding costs in the amount of $3,464.60 to the

defendants, pursuant to Mass. R. Civ. P. 54 (e), as amended, 382

Mass. 829 (1981).     The costs related to six depositions, at

least four of which were of named parties, and two document

subpoenas.   While only one transcript may have been used at

trial, and no documents may have been produced in response to

the subpoenas, we see no basis for concluding that the award

amounted to an abuse of discretion.     See Scholz v. Delp, 473

Mass. 242, 254 (2015), cert. denied, 136 S. Ct. 2411 (2016).

                                      Judgment affirmed.

                                      Order awarding costs
                                       affirmed.