Opinion
C.A. PC 08-3664
05-29-2013
JAMES F. NUZZO, JR. Plaintiff, Counterclaim Defendant v. NUZZO CAMPION STONE ENTERPRISES, INC. f/k/a CORRIVEAULT HOLDINGS, INC. Defendant, Counterclaim Plaintiff v. RITA CAMPION Third Party Defendant
For Plaintiff: David M. Campbell, Esq. For Defendant: Andrew J. Tine, Esq.
Providence County Superior Court
For Plaintiff: David M. Campbell, Esq.
For Defendant: Andrew J. Tine, Esq.
DECISION
LANPHEAR, J.
This matter was tried, jury waived. By agreement, the parties agreed to sever the issues at trial. At an initial trial, the Court would consider the breach of contract claims contained in the complaint, counterclaim and third party complaint. The issue of unjust enrichment would be deferred. This trial focused on whether Mr. Nuzzo was sufficiently paid for sales commissions by the Corriveault Company.
I
FINDINGS OF FACT
Plaintiff, James F. Nuzzo, Jr., was an owner and officer of Nuzzo & Campion Stone Enterprises, Inc. His company was initially involved in construction for about twenty years. After 1998, the company successfully concentrated its business in the sale of stone and tile. In 2006, Mr. Nuzzo was contacted by David Corriveault, who expressed an interest in acquiring the business. After several months, their discussions resulted in a closing where the assets of the business were sold to Corriveault Holdings, Inc. The buyer later did business under the name of Nuzzo Campion Stone Enterprises, Inc. As the names of the different entities are similar, the businesses will be referenced as the "Nuzzo Company" and the "Corriveault Company" to avoid confusion.
Each of the entities was represented by attorneys before and at the closing. At the October 2006 closing, the parties executed a number of documents. The Asset Purchase Agreement (Joint Ex. 1) discussed the transfer of ownership of the inventory, computers, records, contract rights and other assets. The Sales Commission Agreement (Joint Ex. 2) defined the ongoing independent contractor relationship between Mr. Nuzzo and the Corriveault Company. Mr. Nuzzo agreed to assist with promoting, developing and procuring sales on a commission basis. A portion of the Sales Commission Agreement states:
6. Compensation. (a) General Sales. Nuzzo will be paid a commission of seven (7%) percent of gross proceeds from all sales generated by Corriveault except for material tiles sales. Commissions shall be deemed to have been earned when an order is paid in full, unless otherwise agreed between the parties. Payment of commissions earned will occur on the 10th and 20th of each calendar month following the calendar month in which such commission became earned, for all orders that have been paid in full.…
(b) Material Tile Sales. Nuzzo will be paid forty (40%) percent of the general profit markup on material tile sales, not to be reduced by any decrease or discount in purchase price. Should an error occur in the bidding process, Nuzzo's commission will not be affected. Tile commission payments shall be deemed to have been earned when an order is paid in full, unless otherwise agreed by the parties. Payments of commission earned will occur on the 15th and 30th of each calendar month following the calendar month in which such commission became earned for all orders that have been paid in full …Joint Ex. 2, unnumbered p. 2.
Mr. Nuzzo actively continued to make sales calls and generate sales to old and new customers. He was paid for some commissions. The Sales Commission Agreement provided that Mr. Nuzzo would serve for one year, but either party could terminate the agreement earlier. On or about April 30, 2007, Mr. Corriveault handed Mr. Nuzzo a Notice of Termination (Joint Ex. 4) which terminated Mr. Nuzzo's sales contract with the Corriveault Company.
Mr. Corriveault received communications from the Rhode Island Division of Taxation indicating taxes may be due. While Mr. Nuzzo presented a certificate of good standing from the Division of Taxation at the closing, the Division of Taxation continued to make inquiries. The Division sent a payment demand to "Nuzzo & Campion" in March 2008 at the Corriveault company's business address. Mr. Corriveault therefore opened the letter. Even though it appears to reference an old taxpayer identification number, Mr. Corriveault was reasonably concerned: A significant amount was requested, the names were similar, and the Tax Division's ire was now raised. The issue appears to have been resolved by Mr. Corriveault's actions in obtaining a new certificate of good standing.
Though Mr. Nuzzo submitted a variety of documents, he never established that he was not paid for orders placed while he was still acting as an independent contractor/salesperson.
II
PRESENTATION OF WITNESSES
Our high court encourages hearing tribunals to "articulate [their] assessment of the witnesses' credibility." State v. Forbes, 925 A.2d 929, 935 (R.I. 2007). At this trial, only the principals of the two original parties, Mr. Nuzzo and Mr. Corriveault, testified.
Mr. Nuzzo was well prepared, clear and descriptive. He appeared not only educated but knowledgeable of his company's business, the finances, and how to manage it. He was co-operative and affable with counsel and the Court. On cross-examination, the Court was left to question how forthcoming he was on the tax delinquency issue, as Mr. Nuzzo seemed to minimize the issue on direct examination. Even though the tax notice may have listed Mr. Nuzzo's employer identification number, it was reasonable for Mr. Corriveault to be concerned. After Mr. Nuzzo's testimony, the Court was left to question whether Mr. Nuzzo knew of this potential problem even before the closing. The vague response lessened Mr. Nuzzo's credibility.
Mr. Nuzzo was less familiar with many of the documents he was shown on cross-examination. This was probably because he was being questioned concerning individual financial transactions which occurred over six years ago. However, his credibility was lessened when he claimed he needed to rely on the Corriveault Company's books to determine how much he was due at the end of his relationship, though he kept his own tally. Earlier, Mr. Nuzzo had commented that he received regular spreadsheets with his checks indicating the commissions, but as he testified, "There was a sheet; but I could never make any sense of it." In spite of his questioning of those records, he relied on those records rather than his own to compute his alleged damages. Mr. Nuzzo was sophisticated enough to verify the reason why he was receiving each check, and know what monies he was due. Generally, Mr. Nuzzo's credibility was not in doubt but with these matters, credibility was in issue several times.
Mr. Corriveault's testimony was even less controversial. During a succinct direct examination, he minimally discussed his company's relationship with Mr. Nuzzo, but focused on specific customer jobs. Mr. Corriveault substantiated that he promptly billed Mr. Nuzzo for warranty work he performed on old projects, and for Mr. Nuzzo's benefit, and was never reimbursed. His testimony was concise, crisp, and direct. He seemed not only prepared on all issues, but familiar with all of the finances involved. On cross-examination, his credibility was never directly attacked. Mr. Corriveault continued to demonstrate a thorough knowledge of his accounts and the closing amounts, and he was able to justify the amounts due his company by language in the agreements. He added that he continues to get audited for taxes. He credibly testified that he delivered back-up information (Def's Exs. A, D, E, F, G and H) for the amounts due to Mr. Nuzzo in the office. He voluntarily qualified this answer by noting that he was unsure if the payroll information attached in the exhibits had been given to Mr. Nuzzo. This qualification of his answer strengthened his credibility. The Court found Mr. Corriveault to be credible.
This warranty work performed for work and material supplied to customers by the Nuzzo Company was to be reimbursed according to the written agreements. See, for example, Asset Purchase Agreement section 4.5 (c).
III
ANALYSIS
A.
When Mr. Nuzzo's Commissions Are Earned
The principal dispute between the parties is the issue of which commissions are still due to Mr. Nuzzo. Boiled to its essence, the Plaintiff claims he was "entitled to commission compensation for sales orders which occurred during plaintiffs tenure but were paid after plaintiffs termination." Pl.'s Post-Trial Mem. of Law, at 2. Mr. Nuzzo contends that he is due to be paid for a commission when the sale is made; that is, when the sale is written and signed by the customer, the commission is earned by him.
The Sales Commission Agreement speaks directly to the issue. As each of the parties acknowledges there is no ambiguity in the contract language, this dispute may be resolved by interpreting the contract language. Although each party agreed that the contract was not ambiguous, whether or not a contract is ambiguous is a question of law. Beacon Mutual Insurance Co. v. Spino Brothers, Inc., 11 A.3d 645, 648 (R.I. 2011) (citing Irene Realty Corp. v. Travelers Property Casualty Co. of America, 973 A.2d 1118, 1122 (R.I. 2009)), though if an ambiguity does exist, the construction is a question of fact. '"In determining whether or not a particular contract is ambiguous, the court should read the contract in its entirety, giving words their plain, ordinary, and usual meaning.'" Young v. Warwick Rollermagic Skating Center, Inc., 973 A.2d 553, 558 (R.I. 2009) (quoting Mallane v. Holyoke Mutual Insurance Co. in Salem, 658 A.2d 18, 20 (R.I. 1995)). See also RBS Citizens Bank, N.A. v. Issler, 21 A.3d 293, 298 (R.I. 2011). The Court finds the contract clear on its face and unambiguous.
In construing an unambiguous contract, the Rhode Island Supreme Court has been just as clear:
It is a fundamental principle of contract law, and the settled law of this state, that "clear and unambiguous language set out in a contract is controlling in regard to the intent of the parties to such contract and governs the legal consequences of its provisions."Sophie F. Bronowiski Mulligan Irrevocable Trust v. Bridges, 44 A.3d 116, 121 (R.I. 2012) (quoting Elias v. Youngken, 493 A.2d 158, 163 (R.I. 1985)).
Again, the explicit language of the signed Sales Commission Agreement states that for general sales, "Commissions shall be deemed to have been earned when an order is paid in full, unless otherwise agreed between the parties." (Sales Commission Agreement, page 2). For Material Tile Sales, "Tile commission payments shall be deemed to have been earned when an order is paid in full, unless otherwise agreed by the parties." (Sales Commission Agreement, page 2). The Sales Commission contract is clear and explicit. Commissions on general sales are earned when an order is paid in full, but paid on set dates. In other words, no commission is due when a sale is worked up, and a customer is tended to, or even when an order is placed. The commission is only due and earned when the customer pays for the order.
While it can now be questioned whether this arrangement was the fairest possible, or left each party with the best result, that is not a function of contract interpretation. As Justice Holmes once stated in a dissenting opinion, "If the contract is one that ought not to be made, prohibit it. But if it is a perfectly fair and proper contract, I can see no reason why the state should not throw its weight on [one] side …" Bailey v. State of Alabama, 219 U.S. 219, 247-248, 31 S.Ct. 145, 154 (U.S. 1911).
Mr. Nuzzo is requesting commissions for orders made after he was terminated. The contract is clear: he is not entitled to such commissions. Mr. Nuzzo has not established that Nuzzo Campion Stone Enterprises, Inc. breached the contract.
B.
Claims of Mr. Nuzzo
1. Commissions Due
For the reasons stated, Mr. Nuzzo has failed to establish that any commission amounts remain due to him. However, Mr. Corriveault openly acknowledges that Mr. Nuzzo is due a commission of $28,691.03 for unpaid commissions as calculated by Joint Ex. 5.
Plaintiff s Ex. 1 is a purported listing of all sales he made. Although he had broad access to the Corriveault Company's books through the cooperative staff members, Mr. Nuzzo failed to indicate when the invoice was paid. A date is included, but presumably it is an order date. Mr. Nuzzo testified that he failed to be paid for commissions on the Parker Thompson and Ben Field orders. Though these orders were placed before Mr. Nuzzo's termination, he never established when the invoices were paid. The Court finds Joint Ex. 5 more reliable as it indicates the payment dates, is more detailed, and Mr. Nuzzo admits that he used the company books to prepare his reports.
See Def's Proposed Finding of Facts, ¶11.
2. Severance
Paragraph 10 of the Sales Commission Agreement says, in part, "In the event that this Agreement is terminated by Corriveault, Nuzzo shall be entitled to severance pay in the amount of twenty five percent (25%) of total commissions earned during the portion of the term hereof prior to such termination. . . ." As indicated above, the Agreement provides that the commissions are not earned until paid by the customer. All of Mr. Nuzzo's calculations for severance are based on commissions not paid and therefore not earned. Mr. Nuzzo has not submitted sufficient proof by a preponderance of the evidence to substantiate the amount of severance he claims. Mr. Corriveault, using Joint Ex. 1, substantiates that the Corriveault Company owes $7176.76 for unpaid severance; hence, the Court finds $7176.76 due to Mr. Nuzzo for unpaid severance. The Court infers that the delay in paying this commission was fueled, at least in part, by Mr. Nuzzo's failure to follow the express terms of the Sales Commission Agreement and failure to remit expenses he owed.
See Def's Proposed Finding of Facts, ¶ 12.
C.
Claims of Mr. Nuzzo
Mr. Corriveault has brought counterclaims against Mr. Nuzzo and a third party action against Rita Campion.
Paragraph 7 of the Sales Commission Agreement states: "Expenses. During the term of this Agreement, Nuzzo shall pay and shall not be reimbursed by Corriveault for out-of pocket expenses.…" Hence, Mr. Nuzzo was to reimburse the company for his expenses, including his use of the company cellphone and his health insurance. These costs total $16,898.20 and were established by Exs. A, F, G, and H. Hence, Mr. Nuzzo is indebted to the Corriveault Company for $16,898.20 and has breached the contract by failing to reimburse these amounts.
The Court could not find by a preponderance of the evidence that Mr. Nuzzo acted in violation of the agreements by competing, directly or indirectly, soliciting customers or prospective customers, or doing business with any competitors of the Corriveault Company.
Mr. Corriveault failed to establish a claim against Ms. Campion.
IV
CONCLUSION
Mr. Nuzzo is due $28,691.03 for unpaid commissions and $7176.76 for unpaid severance from the Corriveault Company. The Corriveault Company is due $16,898.20 from Mr. Nuzzo for unpaid expenses. The net amount due to Mr. Nuzzo is $18,969.59.
Judgment shall enter for Plaintiff Mr. Nuzzo and against Defendant the Corriveault Company on Count One of the Complaint. Judgment shall enter for Defendant Counterclaim Plaintiff on Count One of the Counterclaim. Judgment shall enter for the Plaintiff Mr. Nuzzo and against the Defendant Counterclaim Plaintiff on Count Two of the Counterclaim. Other counts of the Complaint and Counterclaims were severed. Judgment shall enter for Ms. Campion, the Third Party Defendant, on all claims in the Third Party Complaint.
While the parties attempted to separate the other counts from the breach of contract trial, the Court notes that the specific issue here was addressed explicitly in the written contract between the parties. Our high court recently declared:
This Court has held that actions brought upon theories of unjust enrichment and quasi-contract are essentially the same.
. . . [I]t is generally true that there must be no adequate remedy at law for a plaintiff to proceed in equity . . ." Multi-State Restoration, Inc. v. DWS Properties, LLC, 61 A.3d 414, 418-419 (R.I. 2013).Here, it is difficult to ascertain how Mr. Nuzzo may have any equitable rights for an issue specifically described in an unambiguous contract.