Court Opinion

ID: 159008
Source: CourtListenerOpinion
Date Created: 2010-08-14 05:32:38+00
Date Added: 2024-06-11T15:02:16.976054
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                         DEC 21 1999
                                 TENTH CIRCUIT
                                                                       PATRICK FISHER
                                                                             Clerk

 LUIS SASTRE,

          Plaintiff-Appellant,
          v.                                             No. 98-3330
 CESSNA AIRCRAFT COMPANY,                      (D.C. No. 96-CV-1456-MLB)
                                                         (D. Kan.)
          Defendant-Appellee.

                             ORDER AND JUDGMENT *

Before BALDOCK, EBEL, and KELLY, Circuit Judges.

      Plaintiff Luis Sastre appeals the district court’s grant of summary judgment

in favor of Defendant Cessna Aircraft Company on his claims of breach of

implied duty of good faith, forfeiture, and unconscionability. We exercise

jurisdiction pursuant to 18 U.S.C. § 1291, and affirm.

                                        I.

      *
        This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      Plaintiff Luis Sastre was a Latin American sales representative for Cessna’s

Citation jet aircraft until his termination, allegedly for filing false travel expense

reports. Two documents, (1) the Statement of Understanding and (2) the annual

Citation Marketing Sales Compensation Plan, contained the terms of Sastre’s

employment. The Statement of Understanding provided that Sastre was an

employee at will. The Compensation Plan, which Cessna presented to Sastre

unilaterally, provided that a sales representative earns his commission for the sale

of an aircraft in two halves: he earns the first, the advance commission payment,

when the Citation Marketing Division Administration (“Marketing”) accepts the

sale, and the second, the delivery commission payment, when Cessna delivers the

aircraft to the customer. Finally, the Compensation Plan unambiguously provided

that if a marketing representative were no longer an employee at the time

Marketing accepted the sale or Cessna delivered the aircraft, the employee would

not receive the advance or delivery commission, respectively.

      At the time Cessna terminated him, Sastre had already arranged the sale of

several aircraft for which he had not yet earned the commissions, either because

Marketing had not yet accepted the sales, or because Cessna had not yet delivered

the aircraft. Sastre sued Cessna to recover these commissions, alleging (1) breach

of an implied covenant of good faith, (2) forfeiture, and (3) unconscionability.

                                          -2-
Cessna filed a motion for summary judgment, which the district court granted.

Sastre appeals.

                                         II.

      We review the district court’s grant of summary judgment de novo,

applying the same legal standard as the district court. See Anderson v. Coors

Brewing Co., 181 F.3d 1171, 1175 (10th Cir. 1999). Summary judgment is

appropriate if no genuine issue of material fact exists. See Fed. R. Civ. P. 56(c).

We view the evidence and draw inferences therefrom in the light most favorable

to the nonmoving party. See Anderson, 181 F.3d at 1175.

      A. Breach of the Implied Covenant of Good Faith

      Sastre argues that the district court should have read an implied covenant of

good faith into the Compensation Plan. The Compensation Plan provided that a

sales representative did not earn advance and delivery commissions until

Marketing had accepted the sale and Cessna had delivered the aircraft,

respectively. Cessna prepared a new Compensation Plan every year and presented

it to its employees unilaterally.

      Under Kansas law, personnel rules that are unilaterally issued by the

employer are not part of the employment contract and therefore cannot be the

basis of an implied covenant of good faith. See Buckley v. Keebler Co., 1998 WL

314566, at *4 (10th Cir. 1998) (unpublished decision); Bartholomew v. City of

                                         -3-
Burlington, Kansas, 5 F. Supp.2d 1161, 1171 (D. Kan. 1998); Kastner v. Blue

Cross and Blue Shield of Kansas, Inc., 894 P.2d 909, 917 (Kan. App. 1995).

Therefore, the district court correctly refused to imply a covenant of good faith on

the basis of the Compensation Plan.

      B. Forfeiture

      Sastre next argues that the Compensation Plan effects a forfeiture in

violation of Kansas law because it provides that a marketing representative does

not receive the advance or delivery commission until Marketing accepts the sale

or Cessna delivers the aircraft to the customer, respectively.

      The Kansas Wage Payment Act, Kan. Stat. Ann. §§ 44.313-327, provides

that terminated employees are entitled to collect all of their “earned wages,” id. at

§ 44.315(a), including commissions, see id. at § 44.313(c). However, an

employment contract may create a condition precedent to the employee’s earning

of wages. See Weir v. Anaconda Co., 773 F.2d 1073, 1084 (10th Cir. 1985);

Smith v. MCI Telecommunications Corp., 755 F. Supp. 354, 358 (D. Kan. 1990);

Weinzirl v. Wells Group, Inc., 677 P.2d 1004, 1008 (Kan. 1984). A condition

precedent is

      something that is agreed must happen or be performed before a right
      can occur to enforce the main contract. It is one without the
      performance of which the contract entered into between the parties
      cannot be enforced. A condition precedent requires the performance
      of some act or happening of some event after the terms of the

                                         -4-
      contract, including the condition precedent, have been agreed on
      before the contract shall take effect.

Weinzirl, 677 P.2d at 1008.

      The Compensation Plan creates two conditions precedent to a marketing

representative’s receipt of the advance and delivery commissions: first,

Marketing must accept the transaction, and second, Cessna must deliver the

aircraft to the customer. In addition, in order to receive the commissions, a sales

representative must be an employee at the time the conditions precedent are

satisfied. Because Sastre had not yet satisfied the conditions precedent when he

was terminated, he had not yet “earned” his commissions under Kan. Stat. Ann. §

44.315(a). Therefore, the district court correctly found that the Compensation

Plan did not effect a forfeiture under the Kansas Wage Payment Act.

      C. Unconscionability

      Sastre finally argues that the Compensation Plan was unconscionable.

Under Kansas law, a contract is unconscionable if it meets the following factors:

             1. The use of printed form or boilerplate contracts drawn
      skillfully by the party in the strongest economic position, which
      establish industry wide standards offered on a take it or leave it basis
      to the party in a weaker economic position;
             2. a significant cost-price disparity or excessive price;
             3. a denial of basic rights and remedies to a buyer of
      consumer goods;
             4. the inclusion of penalty clauses;
             5. the circumstances surrounding the execution of the
      contract, including its commercial setting, its purpose and actual
      effect;

                                         -5-
             6. the hiding of clauses which are disadvantageous to one
      party in a mass of fine print trivia or in places which are
      inconspicuous to the party signing the contract;
             7. phrasing clauses in language that is incomprehensible to a
      layman or that divert his attention from the problems raised by them
      or the rights given up through them;
             8. an overall imbalance in the obligations and rights imposed
      by the bargain;
             9. exploitation of the underprivileged, unsophisticated,
      uneducated and the illiterate; and
             10. inequality of bargaining or economic power.

Wille v. Southwestern Bell Tel. Co., 549 P.2d 903, 906-07 (Kan. 1976) (citations

omitted).

      Sastre has not shown, either in the district court or on appeal, that the

Compensation Plan was a contract. Even if the Compensation Plan is a contract,

it is not unconscionable: factors 1-3 and 7-9, regarding consumer transactions,

are not applicable, and Sastre has not presented evidence that supports a finding

of unconscionability under factors 4 (penalty clauses), 5 (circumstances of the

contract’s execution), or 6 (hidden language or fine print). The evidence

supporting factor 10, that Cessna’s unilateral presentation of the Compensation

Plan to Sastre demonstrated disparate bargaining power, is not alone enough to

raise an issue of material fact regarding unconscionability. Accordingly, the

decision of the district court is

             AFFIRMED.
                                               Entered for the Court,

                                               Bobby R. Baldock
                                               Circuit Judge

                                         -6-