Vander Veur v. Groove Entertainment Technologies
Vander Veur v. Groove Entertainment Technologies
Opinion
¶1 Mike Vander Veur appeals the district court's grant of summary judgment to Groove Entertainment Technologies. Groove terminated Vander Veur's employment in June 2013. Vander Veur argues that the district court incorrectly granted summary judgment to Groove on his claims for breach of the implied covenant of good faith and fair dealing regarding certain commissions and a bonus to which he claims entitlement. He also argues that the district court erred in granting summary judgment in Groove's favor on its unjust enrichment claim, which was based on Vander Veur's retention of certain commission draws following his termination. We affirm in part, vacate in part, and remand for further proceedings.
BACKGROUND 1
¶2 Around September 2010, Groove, a company that sells television services to customers, such as hotels, hired Vander Veur as a sales representative. Vander Veur's duties included, among other things, producing leads and generating new business by signing new customers for television services.
¶3 In October 2012, Vander Veur and Groove entered into a Sales Representative Compensation Agreement (the Compensation Agreement). Among its relevant provisions, the Compensation Agreement provided that it would be effective as of October 15, 2012, and that it would "remain in effect as long as [Vander Veur] is employed by Groove." The agreement further provided that "Groove [would] pay [Vander Veur] a commission for each Qualifying Sale deemed commissionable as defined in this Agreement." The Compensation Agreement defined "Qualifying Sale" as "a commissionable sale where the minimum margin requirements are met and the installation is complete." It also explained that Vander Veur was entitled to biweekly draws against his earned commissions and that these draws would be deducted from his earned commissions.
¶4 Vander Veur also signed an Employee Handbook Acknowledgement on three separate occasions-in December 2010, December 2011, and April 2013. Each acknowledgement explained that, notwithstanding the policies and procedures detailed in the handbook, Vander Veur's employment was at will; both Groove and Vander Veur had the right to terminate their employment relationship at any time, with or without notice or cause.
¶5 Groove terminated Vander Veur's employment in June 2013. At the time of termination, Vander Veur was in the process of procuring six commissionable sales. While Vander Veur had apparently obtained either written sales contracts or verbal commitments for each sale, it is undisputed that at the time of his termination none of those sales had been installed. The first of the six installations took place in July 2013, approximately one month after Vander Veur's termination, and all six sales were installed within three months of his termination. Groove did not pay Vander Veur any commission for the six sales.
¶6 In addition, before his termination, Vander Veur was working with Groove's lead sales representative and another Groove employee to complete a large sale to provide satellite services to a hotel. In connection with this sale, Groove stood to be paid a sizeable bonus from Showtime (the Showtime bonus). Groove's president, Vander Veur, and the lead sales representative apparently agreed that, after paying $1,000 to the other Groove employee who had assisted with the sale, they would split the Showtime bonus evenly between them. 2 Groove did not receive the bonus from Showtime until nearly one month after Vander Veur's termination, and Groove did not share any portion of it with Vander Veur.
¶7 After his termination, Vander Veur filed suit against Groove. Among other things, he alleged that Groove had breached the implied covenant of good faith and fair dealing in the compensation and bonus agreements by terminating him for the express purpose of avoiding paying him the six commissions and the Showtime bonus. 3 Groove counterclaimed, asserting breach of contract and unjust enrichment claims against Vander Veur on the basis that Vander Veur had retained certain draw monies that exceeded the commissions he had earned prior to his termination. Groove's breach of contract claim was based upon a 2013 Sales Representative Agreement (the 2013 Agreement) that Vander Veur had not signed, and it pleaded its unjust enrichment claim in the alternative.
¶8 Groove moved for summary judgment on Vander Veur's claims as well as its unjust enrichment counterclaim. As to the six commissions, Groove argued that Vander Veur could not rely on the implied covenant of good faith and fair dealing to claim entitlement to the commissions in light of "the parties' course of dealing and [Vander Veur's] at-will employment status." Groove pointed to the plain language of the Compensation Agreement, asserting that the agreement unambiguously stated that commissions were not earned until installation. Groove also characterized Vander Veur's breach of the implied covenant claim as an improper attempt to have the court "retroactively re-craft more favorable payment terms" than those to which Vander Veur agreed, asserting that it undoubtedly never would have agreed to pay Vander Veur commissions for post-termination installations had it considered and addressed the issue in the Compensation Agreement. Indeed, Groove claimed that it had " never paid commissions to sales representatives for installations that were completed after the termination of employment." Groove further argued that Vander Veur could not "use the covenant to pencil in a 'good cause' termination restriction" in light of the "numerous acknowledgements he signed in which he expressly recognized that his employment was at-will."
¶9 Regarding the Showtime bonus, Groove similarly argued that Vander Veur's claim for breach of the implied covenant was unavailing where Groove "never would have agreed to pay Vander Veur" that bonus "after the termination of his employment." In its summary judgment reply memorandum, Groove also contended that the claim should be dismissed for the alternative and independent reason that there was "no enforceable contract" as to the Showtime bonus, because there was no meeting of the minds on whether Vander Veur would have been entitled to the bonus post-termination.
¶10 Finally, Groove argued that it was entitled to judgment as a matter of law on its unjust enrichment claim. Groove accepted for purposes of summary judgment that, as Vander Veur claimed in his answer, the 2013 Agreement was "inapplicable to him," and Groove argued that it met the three requirements to establish unjust enrichment.
See generally
Rawlings v. Rawlings
,
¶11 In response, Vander Veur argued that summary judgment was inappropriate on his breach of the implied covenant claims because "[a] rational jury could determine based on the facts" that Groove's claimed reason for terminating him was mere pretext and that his termination, "executed on the eve of him becoming eligible for significant commission and bonus payments," was instead done "to deprive him of the commissions and bonuses he was to receive once the jobs he had sold were installed." Regarding Groove's counterclaims, Vander Veur argued that Groove was not entitled to judgment on its unjust enrichment claim for two reasons. First, he argued that because an unjust enrichment claim is cognizable only if no contract controls, Groove could not prevail simply by "ignor[ing]," for purposes of summary judgment, the 2013 Agreement on which its breach of contract counterclaim was based. Rather, Vander Veur contended that Groove should have to "withdraw its breach of contract claim," or, at the very least, be required to explain "why it has no legal remedy under its breach of contract cause of action prior to proceeding with its unjust enrichment claim." Second, he argued that Groove had failed to prove its unjust enrichment claim primarily because the existence of his own claims made the calculation of the benefit conferred to him and his liability for it "impossible," where he could be entitled to offset as well as pre- and postjudgment interest, should he prevail.
¶12 The district court granted summary judgment to Groove on all issues, dismissing Vander Veur's claims with prejudice. It also entered judgment in Groove's favor for unjust enrichment in the amount of $2,925.04, plus prejudgment interest. Vander Veur appeals.
ISSUES AND STANDARD OF REVIEW
¶13 Vander Veur argues that the district court improperly granted summary judgment in favor of Groove on his claims for breach of the implied covenant of good faith and fair dealing as well as Groove's unjust enrichment claim. Summary judgment is appropriate "if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Utah R. Civ. P. 56(a). "An appellate court reviews a district court's legal conclusions and ultimate grant or denial of summary judgment for correctness and views the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party."
ZB, N.A. v. Crapo
,
ANALYSIS
I. Breach of the Implied Covenant of Good Faith and Fair Dealing
¶14 Vander Veur argues that the district court incorrectly granted Groove summary judgment on his claims for breach of the implied covenant of good faith and fair dealing. Although he acknowledges the at-will nature of his employment with Groove, he nevertheless asserts that terminating his employment for the express intention of depriving him of the fruits of certain compensation agreements goes to the core of the covenant that the Utah Supreme Court identified in
Young Living Essential Oils, LC v. Marin
,
¶15 Groove disagrees, arguing that Vander Veur seeks to circumvent the terms of the agreements at issue and the at-will nature of his employment by using the covenant to create a new term or obligation to which it clearly did not, and never would have, agreed-that is, paying Vander Veur commissions and bonuses for sales he generated but that were completed post-termination. Because Vander Veur has not established that Groove would have " undoubtedly ... agreed to the post-termination payment arrangement" that he seeks, Groove asserts that Vander Veur "has not satisfied his substantial threshold burden" to survive summary judgment below or prevail on appeal.
¶16 The parties therefore disagree about the applicability of the covenant in the circumstances present here, particularly given the at-will nature of Vander Veur's employment. To determine whether the district court erred in granting summary judgment on Vander Veur's claims for breach of the implied covenant, we therefore must decide the extent to which the covenant may be applied in this case, where an at-will employee is seeking compensation for commissions to which he claims he would have been entitled pursuant to a compensation agreement had his employment not been terminated for the purpose of depriving him of those commissions.
¶17 Despite Vander Veur's contention to the contrary, this appears to be a matter of first impression for our courts. As we explain below, see infra ¶¶ 19-30, Utah's appellate courts have recognized the applicability of the implied covenant of good faith and fair dealing to at-will employment relationships, but have not yet determined whether the implied covenant is available to provide relief in these circumstances.
¶18 We therefore begin by discussing the function of the covenant, and we ultimately conclude that the covenant may be employed in limited circumstances to protect an at-will employee's right to receive compensation for work performed pursuant to a compensation agreement attendant to the at-will employment relationship. We then apply this principle to determine whether dismissal of Vander Veur's implied covenant claims regarding entitlement to the six sales commissions and the Showtime bonus was proper. We ultimately conclude that it was improper to dismiss Vander Veur's claims as to the six commissions and the Showtime bonus.
A. At-Will Employment and the Implied Covenant of Good Faith and Fair Dealing
¶19 Vander Veur asserts that his termination violated the implied covenant of good faith and fair dealing, because it was carried out for the specific purpose of depriving him of his right to the compensation he was to receive under the Compensation Agreement and the Showtime bonus oral contract. This case therefore involves the intersection of an at-will employment relationship, where the employee may be terminated with or without cause, and the applicability of the implied covenant to obligations inherent in separate agreements attendant to an at-will employment relationship.
¶20 It is well-settled that the implied covenant of good faith and fair dealing inheres in every contract,
see
Nelson v. Target Corp.
,
¶21 That said, the covenant has a limited role in contractual disputes.
See
Young Living Essential Oils, LC v. Marin
,
¶22 However, Vander Veur was an at-will employee. At-will employment relationships are those "entered into for an indefinite period of time,"
Cabaness v. Thomas
,
¶23 Utah has recognized the availability of breach of the implied covenant of good faith and fair dealing as a cause of action to protect justified expectations arising from agreements attendant to an at-will employment relationship.
See
Cook
,
¶24 We are persuaded that the reasoning in
Cook
should be extended to the narrow circumstances present here. Like the appellant in
Cook
, Vander Veur and Groove entered into agreements attendant to Vander Veur's at-will employment-compensation agreements-that created and described distinct rights and obligations related to the payment of certain benefits, apart from the general at-will relationship.
See
Cook
,
¶25 In extending the reasoning in
Cook
, we emphasize that this extension, and the window for recovery under it, is narrow. The implied covenant may not be used as an avenue to avoid termination of the at-will employment relationship itself. While an at-will employee may have a right to certain benefits arising under an attendant compensation agreement, the employee has no right to continued tenure under an at-will employment relationship.
See
Wakefield
,
¶26 Instead, we decide today only that breach of the implied covenant of good faith and fair dealing may be asserted for the limited purpose of protecting from opportunistic interference an employee's justified expectations in receiving the fruits of a compensation agreement attendant to the at-will employment relationship after that relationship has been terminated.
See
Cook v. Zions First Nat'l Bank
,
¶27 For example, in
Fortune v. National Cash Register Co.
,
¶28 Similarly, in
Wakefield v. Northern Telecom, Inc.
,
¶29 In the foregoing cases, while the employee did not have a right to continued employment to earn commissions or benefits, the employee did have (or could have had) the right under the attendant compensation agreements not to be terminated for the bad faith purpose of depriving the employee of commissions the employee would have received. The courts reasoned that the implied covenant appropriately protected an employee's justified expectations under attendant compensation agreements from an employer's bad faith attempt-often through terminating the employment relationship-to avoid paying compensation to the employee for work performed. In our view, this reasoning comports both with the nature of at-will employment relationships and the reasoning we expressed in
Cook
.
See
Cook
,
¶30 Having decided that the implied covenant of good faith and fair dealing may be applicable in the limited circumstances present here, we therefore proceed to address each agreement at issue-the six commissions under the Compensation Agreement and the compensation under the Showtime bonus oral agreement.
B. The Six Commissions and the Compensation Agreement
¶31 Vander Veur argues that the district court incorrectly granted summary judgment against him on his claim that Groove breached the implied covenant of good faith and fair dealing by terminating his employment to avoid paying him commissions on the six sales he had procured, but which had not yet been installed, before his termination. The district court dismissed this claim. The court reasoned that Vander Veur had to "establish that the parties undoubtedly would have agreed" to pay Vander Veur for the six commissions post-termination had they "considered and addressed it at the outset," and it determined that "[t]his requirement is fatal to Vander Veur's claim." The court then concluded that the undisputed facts demonstrated that Groove would not have agreed to such a covenant and that "[t]o hold that Groove might have an obligation to pay commission payments to Vander Veur would impose a new affirmative obligation on Groove that is outside the [Compensation] Agreement and unsupported by the course of conduct between the parties."
¶32 We concluded above that an at-will employee may assert a claim under the implied covenant to recover compensation he or she would have received under the terms of his or her compensation agreement but for the employer's bad faith termination of the
at-will relationship for the purpose of depriving the employee of that compensation.
See generally
Cook v. Zions First Nat'l Bank
,
¶33 We therefore vacate the district court's dismissal of the implied covenant claim for the six commissions and remand for further proceedings. To be sure, we express no opinion on whether Vander Veur might be ultimately successful in proving his claim in the district court, should the case proceed to trial. But for purposes of this appeal, it is enough that the court erred in its application of the implied covenant to the circumstances of this case.
C. The Showtime Bonus
¶34 Vander Veur also argues that the district court erred when it dismissed his breach of the implied covenant claim as to the Showtime bonus. The district court provided two alternatives for its dismissal of this claim. First, the court determined that it was "undisputed that Groove and Vander Veur would not have agreed to a covenant that provided for payment of the Showtime bonus after Vander Veur was terminated from Groove," and that to conclude that Groove "might have an obligation to pay a post-termination Showtime bonus payment to Vander Veur would impose a new affirmative obligation on Groove" that was unsupported by the parties' course of conduct. In the alternative, the court concluded that "there was no enforceable contract as to the Showtime bonus," because "there was never a meeting of the minds regarding [the] material contract term" of whether Vander Veur would have forfeited the Showtime bonus "if his employment were terminated prior to Groove's receipt of the Showtime funds."
¶35 Given our conclusion above, supra ¶¶ 19-30, we cannot sustain the district court's dismissal based on its analysis of the implied covenant; Vander Veur's claim does not create a "new affirmative obligation" for Groove but instead only seeks to assert entitlement to the bonus money based upon purported rights and obligations created by the bonus agreement itself.
¶36 Likewise, we are unable to sustain the district court's dismissal on the basis that there was no enforceable contract between Vander Veur and Groove regarding the Showtime bonus. Groove did not move to dismiss the Showtime bonus claim for lack of an enforceable contract. Rather, the only ground Groove asserted for dismissal of this claim was Vander Veur's failure to demonstrate entitlement to relief under the implied covenant-a proposition necessarily dependent on the Showtime bonus agreement being an enforceable contract.
See
Tomlinson v. NCR Corp
.,
The district court's adoption of the contractual basis as an alternate ground for dismissal closely tracked Groove's limited argument on the point and, accordingly, suffered from similar underdevelopment. Like Groove, the court did not discuss the relevant facts and articulate its reasoning or explain its determination in light of contract law principles.
¶37 As a result, we are unable to discern the legal or the factual basis for the district court's dismissal on this ground.
See
Gabriel v. Salt Lake City Corp.
,
II. Unjust Enrichment
¶38 Vander Veur also argues that the district court incorrectly granted summary judgment in favor of Groove on the unjust enrichment counterclaim. He asserts that the district court's resolution of the counterclaim was improper for two reasons: (1) Groove had a legal remedy available, as it asserted that a contract governed the resolution of the claim; and (2) even if no contractual remedy was available, Groove failed to prove its entitlement to its unjust enrichment claim. "Claims based on equitable doctrines are mixed questions of fact and law. Accordingly, we defer to a trial court's factual findings unless there is clear error but review its legal conclusions for correctness."
Cottonwood Improvement District v. Qwest Corp
.,
¶39 First, as Vander Veur asserts, because unjust enrichment is an equitable remedy, a party may not recover under unjust enrichment if there is a legal remedy available.
See
Helf v. Chevron U.S.A. Inc
,
¶40 But Groove's assertion that there was a legal remedy governing the repayment of the draws was disputed between the parties. In its counterclaim, Groove contended that it was entitled to recover these draws under the 2013 Agreement to which Vander Veur never formally agreed in writing. That agreement contained an express provision related to repayment of draws against commissions. In his answer, Vander Veur disputed that he was subject to the 2013 Agreement. Thus, in its summary judgment motion, Groove accepted for purposes of the motion Vander Veur's contention that the 2013 Agreement did not apply to him, and it argued entitlement to judgment as a matter of law solely under the theory of unjust enrichment.
¶41 We have previously observed that concessions made for these limited purposes are acceptable in circumstances involving claims pleaded in the alternative.
See
Govert Copier Painting v. Van Leeuwen
,
¶42 Of course, having received judgment on its unjust enrichment claim, Groove may not obtain double recovery by pursuing an alternative claim for breach of contract. "When a final disposition of a case is entered by a district court, any unresolved motions inconsistent with that disposition are deemed resolved by implication."
State v. Mullins
,
¶43 Second, Vander Veur contends that Groove has failed to prove its unjust enrichment claim on the merits. "Unjust enrichment is an equitable remedy that can be brought to bear where one person confers a benefit on another under circumstances where it would be inequitable for the other to retain the benefit without paying for it."
Simons v. Park City RV Resort, LLC
,
¶44 The district court determined that Groove had "satisfied its burden of demonstrating each of [the three] elements as a matter of law." In particular, it determined that Groove "conferred a benefit on Vander Veur by advancing to him $2,925.04 more than he earned in commissions"; that Vander Veur admitted that "he received these advance draws from Groove" and understood that it was " 'borrowed money' "; and that "Vander Veur's retention of draws he admits he did not earn would be inequitable" because Groove "would not have advanced draws to Vander Veur without his acknowledgement that he would repay Groove any amounts he did not earn in commissions." Further, at oral argument before this court, Vander Veur conceded that he was overdrawn on his commissions and that he did not dispute Groove's accounting of the overdrawn commissions.
¶45 Nonetheless, Vander Veur argues that the district court's determinations were improper because he may be entitled to an offset if he prevails on his implied covenant claims below. He contends that the measurement of the benefit conferred is not possible in light of his pending breach of the implied covenant claims, asserting that whether Groove is equitably entitled to the draws "may only be determined upon resolution of [his] contractual claims." He also contends that Groove cannot prove that the draws he retained belong to Groove as a matter of equity where his entire case surrounded Groove's failure to deal with him in good faith.
¶46 But the district court dismissed each of Vander Veur's breach claims, with the result that the only remaining question before the court was whether Vander Veur would be unjustly enriched by keeping commissions to which he had no entitlement and for which, absent prevailing on appeal, there would be no offset. In these circumstances, the court did not err when it concluded that the undisputed facts demonstrated that Groove was entitled to summary judgment on its claim for unjust enrichment. And Vander Veur has not directed us to any authority establishing that it is impossible for a counterclaimant to prove entitlement-either in measurement or in equity-to its unjust enrichment claim until the plaintiff's claims have been fully resolved on appeal. On this basis, we therefore affirm Groove's unjust enrichment award.
CONCLUSION
¶47 For the reasons discussed above, we affirm the district court's order granting Groove summary judgment on its unjust enrichment claim. However, we vacate the district court's grant of summary judgment in favor of Groove on Vander Veur's claims for breach of the implied covenant of good faith and fair dealing as to the six commissions and the Showtime bonus. We therefore remand for further proceedings.
"In reviewing a district court's grant of summary judgment, we view the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party and recite the facts accordingly."
Ockey v. Club Jam
,
Vander Veur contends that he discussed this arrangement with the lead sales representative; he did not discuss it directly with Groove's president.
Vander Veur also asserted claims for breach of contract and wrongful termination in violation of public policy, but he voluntarily dismissed those claims during the summary judgment proceedings. Likewise, on appeal, Vander Veur initially alleged that Groove had breached the implied covenant of good faith and fair dealing by terminating his employment to avoid paying him another bonus apart from the Showtime bonus, but he abandoned this claim in his reply brief.
There is some disagreement about whether
Wakefield
is still good law in New York. Following
Wakefield
's issuance, the New York Court of Appeals issued
Gallagher v. Lambert
,
See also
Caton v. Leach Corp.
,
Vander Veur cites
Davies v. Olson
,
Reference
- Full Case Name
- Mike VANDER VEUR, Appellant, v. GROOVE ENTERTAINMENT TECHNOLOGIES, Appellee.
- Cited By
- 7 cases
- Status
- Published