020060 Cave Hill Corporation v. Hiers 11/01/2002 In an action for breach of an employment contract, the trial court erred in refusing to rule as a matter of law that the contract was one terminable at
State: Virginia
Docket No: 020060
Case Date: 11/01/2002
Plaintiff: 020060 Cave Hill Corporation
Defendant: Hiers 11/01/2002 In an action for breach of an employment contract, the trial court erred in refusi
Preview: PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Kinser, and
Lemons, JJ., and Compton, S.J.
CAVE HILL CORPORATION
v. Record No. 020060
PHILLIP T. HIERS OPINION BY
SENIOR JUSTICE A. CHRISTIAN COMPTON
PHILLIP T. HIERS November 1, 2002
v. Record No. 020070
CAVE HILL CORPORATION
FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY
John J. McGrath, Jr., Judge
These two appeals arise from a single action for damages
alleging breach of an employment contract. The central question
is whether the trial court erred in refusing to rule that the
contract was clear and unambiguous, and in submitting to a jury
the interpretation of the agreement.
To set the stage, relevant facts, mostly undisputed, that
furnish the background and details of this controversy must be
reviewed. In 1993, plaintiff Phillip T. "Chuck" Hiers commenced
work as a sales person for defendant Cave Hill Corporation in
its division, Atlantic Fabritech, located in Rockingham County.
The defendant manufactures above ground storage tanks, primarily
for use in the oil and lubrication industry.
On September 9, 1998, the plaintiff and defendant, through
its president and sole shareholder, Walter M. Hopkins, executed
the one-page contract that is the subject of this dispute. The
agreement was "composed" by plaintiff and Hopkins, and was
typewritten on a page of Atlantic Fabritech stationery.
The contract is labeled:
"EMPLOYMENT AGREEMENT
EMPLOYEE: PHILLIP T. 'CHUCK' HIERS
TITLE: SALES MANAGER
EFFECTIVE DATES: August 14, 1998 - August 1, 2003"
In a preamble, the writing stated: "This work agreement
established on August 14, 1998 between Cave Hill Corporation,
d/b/a Atlantic Fabritech and Phillip T. Hiers is based on the
following conditions."
Paragraph 1 provided for a $25,000 annual salary plus a
cost-of-living increase.
Paragraph 2 provided, in part, for a two per cent
commission to be paid plaintiff "on Atlantic Fabritech tank
sales quoted, processed, generated and sold by Chuck."
Paragraphs 3 and 4 provided for use of a company vehicle
and for an expense allowance.
Paragraph 5 provided: "Thirty (30) days' notice will be
given by both the employee and the employer in the case of leave
or dismissal."
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Paragraphs 6 and 7 provided for a vacation period, and for
medical and dental insurance.
The agreement concluded with an unnumbered paragraph
delineating plaintiff's job responsibilities.
During the negotiations for the contract, Hopkins told the
plaintiff that one Stacey Sinnett, a former Cave Hill employee,
would be reemployed. The plaintiff understood that Sinnett was
to work for him in sales and in product development. However,
the plaintiff learned the day after the contract was signed that
Sinnett was to be the general manager of Atlantic Fabritech and
that the plaintiff would have "to report to" Sinnett.
Thereafter, disagreement between plaintiff and Hopkins
developed over job duties, commissions on sales, and plaintiff's
overall performance of his assigned work. Specifically,
plaintiff contended that, under the employment agreement, he was
entitled to commissions on all sales, that is, not only on sales
that he made but also on sales that Sinnett made. Hopkins took
the position that the plaintiff was not entitled to a commission
on Sinnett's sales.
During the period from September 1998 to May 6, 1999, the
disagreement continued, with Sinnett issuing "warnings" to
plaintiff about the performance of his duties. Finally, Sinnett
recommended to Hopkins that plaintiff's employment be terminated
because of "the way he handled several volume accounts . . . not
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making as many sales calls . . . as he should, not travelling as
much as we needed . . . [and] not having his office organized."
Hopkins had observed that plaintiff "repeatedly" was late for
work and that he was "working on other projects," including
"selling guns and cars . . . during company business time."
Additionally, according to Hopkins, plaintiff was unable "to get
along with" Sinnett, would not conform to new policies
established by Sinnett, and "fell out with some of the
customers."
Eventually, plaintiff was discharged. In a May 6 letter to
the plaintiff, Sinnett wrote: "We find it necessary to
terminate your employment with Cave Hill Corporation as the
Sales Manager for the Atlantic Fabritech Division effective this
date. You will receive your salary for the month of May, which
we will give you today."
Subsequently, plaintiff filed the present action seeking
damages for breach of the employment contract. In a motion for
judgment, plaintiff asserted that he improperly "was denied
payment of commissions based on sales negotiated and approved by
Sinnett;" that he was criticized "with unjustified and untrue
accusations of inadequate job performance;" that he had been
guaranteed "a fixed term of employment to run from August 14,
1998 to August 1, 2003;" and that he had been "terminated
without just cause."
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In a grounds of defense, defendant denied plaintiff had
been employed for a fixed term. Defendant also filed a
counterclaim seeking damages from plaintiff for breach of
another agreement between the parties; the plaintiff had
promised not to disclose certain confidential and proprietary
information and not to compete with defendant upon termination.
During an August 2001 jury trial, the trial court permitted
the plaintiff to testify extensively, over defendant's
objection, to his "understanding" of many of the terms of the
employment contract. For example, plaintiff said his
"understanding" was that he "would be paid 2% commission on
. . . all tank sales" not "just 2% of what [he] personally sold
to a customer." Also, plaintiff testified about "the intent of
the parties" as set forth in the final paragraph of the
agreement relating to job responsibilities.
The trial court, over defendant's objection, permitted the
jury to interpret the contract, ruling that the agreement was
unclear and ambiguous. The court instructed the jury that it
"must determine whether the contract is for a definite term of
employment or whether it is a contract for employment that is
terminable at will." The court also told the jury that just
cause was required for an employer to terminate a fixed-term
employment contract prior to the end of the term.
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The jury found in favor of the plaintiff on his claim,
fixing the damages at $260,000, and denied the counterclaim.
Subsequently, in an October 2001 judgment order ruling on
defendant's motion to set the verdict aside, the trial court
ordered remittitur to $100,000, and otherwise entered judgment
on the verdict in favor of the plaintiff.
We awarded the defendant an appeal of the court's judgment
for the plaintiff. We also awarded the plaintiff an appeal of
the court's action in ordering remittitur.
Although the parties dwell upon the admissibility of parol
evidence with regard to those portions of the contract dealing
with commissions and job responsibilities, the core of these
appeals is the question whether the trial court erred in
refusing to rule, as urged by defendant, that the contract was
clear and unambiguous in establishing an employment that was
terminable at will. Stated differently, the crux of the
controversy upon review is whether the trial court erred in
determining that a jury issue was created regarding the nature
of the contract.
Settled principles are applicable here. "In Virginia, an
employment relationship is presumed to be at-will, which means
that the employment term extends for an indefinite period and
may be terminated by the employer or employee for any reason
upon reasonable notice." County of Giles v. Wines, 262 Va. 68,
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72, 546 S.E.2d 721, 723 (2001). However, when the employment is
for a definite period, the presumption of at-will employment is
rebutted and an employee may be terminated only for just cause.
Progress Printing Co. v. Nichols, 244 Va. 337, 340, 421 S.E.2d
428, 429 (1992). And, when there is a conflict in the evidence
concerning the terms of an employment contract, the question
whether the employment is at will or for a definite term becomes
one of fact to be resolved by the jury. Miller v. SEVAMP, Inc.,
234 Va. 462, 465-66, 362 S.E.2d 915, 917 (1987).
In the present case, the trial court submitted the
interpretation of the contract to the jury because the court
ruled that its terms were ambiguous. "An ambiguity exists when
language admits of being understood in more than one way or
refers to two or more things at the same time." Renner
Plumbing, Heating & Air Conditioning, Inc. v. Renner, 225 Va.
508, 515, 303 S.E.2d 894, 898 (1983). However, "[c]ontracts are
not rendered ambiguous merely because the parties or their
attorneys disagree upon the meaning of the language employed to
express the agreement." Doswell Ltd. P'ship v. Virginia Elec.
and Power Co., 251 Va. 215, 222-23, 468 S.E.2d 84, 88 (1996).
And, "[e]ven though an agreement may have been drawn unartfully,
the court must construe the language as written if its parts can
be read together without conflict." Id. at 223, 468 S.E.2d at
88.
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On appeal, the plaintiff contends the trial court did not
err in permitting the jury to interpret the agreement. He
argues there was a conflict over the contract's terms and their
meaning. In particular, he maintains he "presented evidence and
argument that the Contract was for a definite term of five years
('Effective Dates: August 14, 1998 - August 1, 2003' . . .) and
that, therefore, the Contract was terminable only upon just
cause and with termination effective only following thirty days
notice." We do not agree.
We hold that the contract was clear and unambiguous. In
plain terms, the contract was effective for a designated period
of time. Nevertheless, the agreement specifically was subject
to certain "conditions," as mentioned in the preamble. The
significant condition relevant here is that either party could
terminate the contract upon 30 days notice, according to the
clear terms of paragraph 5. This notice provision trumped the
effect of the designated time period.
Nowhere in this writing is there any reference to a "just
cause" requirement for job termination by the employer. In
order to find such a requirement, one would have to insert words
into the writing contrary to the elementary rule that the
function of the court is to construe the contract made by the
parties, not to make a contract for them. See Wilson v.
Holyfield, 227 Va. 184, 187, 313 S.E.2d 396, 398 (1984).
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Consequently, we hold that the trial court committed
reversible error in refusing to decide as a matter of law that
the contract was one terminable at will and in permitting the
jury to interpret the agreement. Because plaintiff was an at-
will employee, the defendant properly terminated him upon giving
30 days notice, and the defendant's conduct in this regard is
not actionable.
In view of the foregoing ruling, the parol evidence
question becomes a subsidiary issue. It necessarily follows
from what we already have said that the trial court also erred
in admitting extrinsic evidence of the plaintiff's
"understanding" to explain the terms of the agreement relating
to commissions. "Parol evidence of prior or contemporaneous
oral negotiations are generally inadmissible to alter,
contradict, or explain the terms of a written instrument
provided the document is complete, unambiguous, and
unconditional." Doswell Ltd. P'ship, 251 Va. at 222, 468 S.E.2d
at 88 (quoting Renner, 225 Va. at 515, 303 S.E.2d at 898).
We address the parol evidence issue only because the
plaintiff did have an employment contract, albeit one that was
terminable at will. Thus, he had a potential claim for failure
of defendant to pay commissions due under the contract.
However, we hold that paragraph 2 plainly provides for
commissions on "tank sales quoted, processed, generated and sold
9
by Chuck," and not upon such sales sold by Sinnett. Therefore,
plaintiff, as a matter of law, was not entitled to recover any
sum for commissions on Sinnett's sales.
Consequently, the judgment in favor of the plaintiff will
be reversed and final judgment will be entered here in favor of
Cave Hill Corporation. This ruling renders the other appeal
moot, and it will be dismissed.
Record No. 020060 - Reversed and final judgment.
Record No. 020070 - Dismissed.
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