Schwam v. XO Communications ( 2006 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1060
JAYSON HARRIS SCHWAM,
Plaintiff - Appellant,
versus
XO COMMUNICATIONS, INCORPORATED,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (CA-04-351-1)
Argued: February 2, 2006 Decided: March 24, 2006
Before WILKINS, Chief Judge, and NIEMEYER and WILLIAMS, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Robert J. McManus, KILE, GOEKJIAN, REED & MCMANUS,
Washington, D.C., for Appellant. Daniel Paul Westman, MORRISON &
FOERSTER, L.L.P., McLean, Virginia, for Appellee. ON BRIEF: Scott
W. Houtteman, KILE, GOEKJIAN, REED & MCMANUS, Washington, D.C., for
Appellant.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Jayson Schwam appeals the grant of summary judgment to XO
Communications, Inc. in his suit to recover post-termination
commissions. For the following reasons, we affirm.
I.
In April 2001, XO Communications, a nationwide provider
of telecommunications services located in Virginia, hired Schwam,
a Maryland resident, as a salesperson. Schwam remained with XO from
April 2001 until he was terminated on January 16, 2004. Schwam, an
at-will employee, was paid a base salary plus commissions generated
from his sales. During his employment with XO, Schwam signed the
Acknowledgment Form accompanying XO’s Sales Incentive Plan (SIP),
which governed how his commissions were calculated and paid. In
the SIP, XO reserved the right to “amend, modify, interpret, or
terminate the [SIP] at any time.” (J.A. at 122.) The SIP also
stated that “nothing in this Plan nor anything in it is intended to
create or shall be construed to create or imply the existence of an
employment contract, employment for a specific term, or a guarantee
of employment or job classification between XO Communications and
[Schwam].” (J.A. at 137.) The SIP further stated that “[u]pon any
termination of employment . . . compensation will be based upon the
employee’s last day of work. A terminated employee will be
considered terminated, for the purposes of calculating sales
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incentive compensation, on the last day worked . . . .” (J.A. at
134.)
In November 2001, XO assigned Schwam to their Federal Group
hoping that Schwam could boost sales to the federal government. Two
years later Schwam assumed a business development role in the
Federal Group. As a result of Schwam’s participation in the
Federal Group, XO secured contracts with the U.S. Department of
Transportation (DOT), the Transportation Security Administration
(TSA), and the Environmental Protection Agency (EPA). In 2003, XO
was also approved by the GSA to provide telecommunications services
to the federal sector.
Sometime in late 2003 or early 2004, XO decided to eliminate
the Federal Group and it terminated Schwam’s employment on January
16, 2004. XO offered Schwam a severance package, which Schwam
rejected. Schwam then initiated the present action seeking the
recovery of post-termination commissions generated by the contracts
he procured with the federal government. Schwam presented claims
for breach of written contract for the failure to pay him
$17,003.00 for the TSA contract, breach of an oral contract to pay
additional commissions of $17,109.55, and breach of an oral
contract to pay other commissions of $71,400.00. Schwam also set
forth a claim for unjust enrichment.1
1
Schwam also alleged a claim of promissory estoppel, but he
withdrew this claim.
3
Following a hearing, the district court granted XO’s motion
for summary judgment on the unjust enrichment claim and the first
and third breach of contract claims. The district court then
dismissed Schwam’s second breach of contract claim for lack of
subject matter jurisdiction because Schwam only sought $17,109.55
under that claim. On appeal, Schwam contends only that the
district court erred in granting summary judgment to XO on the
unjust enrichment claim and on the third breach of contract claim.2
We have jurisdiction to review this diversity case under 28
U.S.C.A. §§ 1332 and 1291 (West 1993 & Supp. 2005).
II.
We review de novo “an award of summary judgment, viewing the
facts and inferences drawn therefrom in the light most favorable to
the non-moving party.” EEOC v. Navy Fed. Credit Union, 424 F.3d
397, 405 (4th Cir. 2005). “Such an award is appropriate only if
2
In the concluding paragraph of Schwam’s opening brief, he
requests that we vacate the dismissal of the second breach of
contract claim. Appellant Br. at 30 (“For the foregoing reasons,
it is respectfully requested that this Court: . . . vacate the
District Court’s dismissal of Count II for want of subject matter
jurisdiction. . . .”). Federal Rule of Appellate Procedure
28(a)(9) requires that an appellate brief contain the “contentions
and the reasons for them with citations to the authorities and
parts of the record on which the appellant relies.” Fed. R. App.
P. 28(a)(9). Because Schwam failed to develop any argument or to
cite any cases in support of vacating the award as required by Rule
28, we deem this issue abandoned and do not address it. 11126
Baltimore Boulevard, Inc. v. Prince George’s County, 58 F.3d 988,
993 n.7 (4th Cir. 1995).
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the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, show that there
is no genuine issue of material fact and that the moving party is
entitled to a judgment as a matter of law.” Id. (internal
quotation marks omitted).
A.
The district court granted summary judgment to XO on Schwam’s
unjust enrichment claim because it concluded that the SIP
constituted a valid contract and, under Virginia law, an unjust
enrichment claim will not lie when an express contract exists
between the parties. Thus, to obtain a reversal, Schwam must
demonstrate that the SIP contract is unenforceable. Schwam makes
three arguments why the SIP is unenforceable: (1) the SIP is a
contract of adhesion, (2) XO expressly stated the SIP was not a
contract, and (3) lack of mutuality. We find Schwam’s arguments
unpersuasive.
Under Virginia law, “[a] contract of adhesion is a standard
form contract, prepared by one party and presented to a weaker
party -- usually, a consumer -- who has no bargaining power and
little or no choice about the terms.” Philyaw v. Platinum Enters.,
Inc., 54 Va. Cir. 364 (2001); see also Black’s Law Dictionary 342
(8th ed. 2004)(defining contract of adhesion as the same). As the
district court noted, Schwam admitted that he had employment
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options other than XO and was under no obligation to work for XO.
Schwam also admitted that XO offered him a sales management
position, but he chose the business development position instead.
Schwam’s admission that he had the freedom to take a different job
with XO or to leave XO altogether for a different company indicates
that the SIP Schwam agreed to was not a contract of adhesion under
Virginia law.
Schwam’s next argument, that the SIP is not an enforceable
contract because it states that it is not a contract, is also
without merit. The SIP plainly states that the employee
“acknowledges that this Plan does not affect [his] status as an
employee-at-will of XO” and that it “is not intended in any way to
create and does not create a term of employment or an employment
contract, express or implied, between XO and [the employee].”
(J.A. at 139 (emphasis added).). This statement means only that
the SIP does not create an “employment contract,” but the document
does constitute the compensation contract for the parties. The SIP
provides the entire sales incentive compensation agreement between
XO and its salespersons. Because Schwam is contesting his
compensation -- not his termination -- the SIP, as the express
compensation contract between XO and Schwam, controls this suit.
Finally, Schwam urges us to hold the SIP unenforceable because
it lacks mutuality of obligation. The Acknowledgment Form states
that XO maintains the authority to “amend, supersede, or terminate
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this Plan at any time and at XO’s sole discretion.” (J.A. at 139.)
Schwam contends that this language renders any consideration given
by XO illusory because XO can modify or terminate the plan at its
discretion, and that makes the SIP unenforceable.
Under Virginia law, “[b]oth parties [to a contract] must be
bound, or neither is bound . . . [and] where the consideration for
the promise of one party is the promise of the other party, there
must be absolute mutuality of engagement, so that each party has
the right to hold the other to a positive agreement.” Am. Agri.
Chem. Co. v. Kennedy & Crawford, 48 S.E. 868, 870 (Va. 1904). At
first blush, this rule seems to suggest that we should hold the SIP
unenforceable because XO retained the right to “amend, supersede,
or terminate” the contract at any time, thus making its promise
illusory. A closer examination, however, indicates otherwise. In
American Agricultural Chemical v. Kennedy & Crawford, 48 S.E.2d 868(Va. 1904), the court refused to enforce a contract for the sale of
fertilizer because the contract stated that the seller “reserve[d]
the right to cancel t[he] contract at any time . . . .” Id. at
870. The court reasoned that “[i]n this case the plaintiff made a
proposition to sell, which the defendants accepted, but the
plaintiff’s offer left it optional with it whether or not it would
sell. It did not bind itself to sell.” Id. at 871. “The
plaintiff after that time never did any act or made any promise
which bound it to complete the contract. . . . In the absence of
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such obligation on the part of the plaintiff, and of such a right
on the part of the defendants, there never was a binding engagement
between the parties which a court of law would enforce.” Id.Here, Schwam and XO performed numerous acts indicating their
intent to be bound by the SIP. Prior to terminating Schwam in
January 2004, XO paid Schwam pursuant to the provisions of the SIP
and Schwam accepted the compensation and continued to work. XO’s
consistent performance and compliance with the SIP removes the
illusory nature of its promise leaving the SIP enforceable. Unlike
the plaintiff in American Agricultural Chemical, XO performed acts
“which bound it to complete the contract.” American Agricultural
Chemical, 48 S.E. at 871. This interpretation is also consistent
with the prevailing rule that “[t]he test of mutuality of
obligation of a contract is to be applied not as of the time when
the promises are made but as of the time when the contract is
sought to be enforced.” 17A Am. Jur. 2d Contracts § 22 (2005); see
also Asberry v. Mitchell, 93 S.E. 638, 640 (Va. 1917)(testing
mutuality of obligation at the time a party sought to enforce the
contract). By examining the mutuality of obligation to the SIP at
this time when XO seeks to enforce the SIP over Schwam’s challenge
to it, there can be no doubt that XO’s post-formation acts
sufficiently bound it to the SIP.
In summary, we affirm the district court’s grant of summary
judgment to XO on the unjust enrichment claim because the SIP is
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not a contract of adhesion, it is the compensation contract
governing this dispute, and it is not invalid for lack of
mutuality.
B.
Next, Schwam contends that the district court erred in
granting summary judgment to XO on his third breach of contract
claim. Schwam argues that summary judgment was inappropriate
because (1) an XO supervisor orally modified the terms of the SIP
and (2) the breach of contract claim seeks the recovery of
commissions that were earned prior to termination. We first
address Schwam’s oral modification argument.
In support of this argument, Schwam points to the fact that
Ortega, Schwam’s supervisor, told Schwam that “XO would take care
of him next year, and he would get a part of the commissions based
on the amount of business that he brought to the table.” (J.A. at
59.) Schwam also notes that Ortega further stated that this
statement meant XO would compensate Schwam “fairly.” (J.A. at 60.)
Virginia allows for the modification of written contracts if
evidenced by express mutual assent. Stanley’s Cafeteria, Inc. v.
Abramson, 306 S.E.2d 870, 872 (Va. 1983). Assuming that the SIP
could be modified by oral agreement, Ortega’s statements do not
constitute an enforceable oral modification because the statements
are too indefinite. The SIP provides 23 pages of detailed
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information regarding the calculation and payment of commissions.
It is hardly plausible that Ortega’s statements that XO would “take
care of” Schwam and that Schwam “would get a part of the
commissions” could effectively modify such detailed provisions. In
fact, at the summary judgment hearing, Schwam’s attorney admitted
that Ortega did not specify the percentage of revenues Schwam would
receive and that Ortega’s statements were “indefinite” as to when
the commissions would be paid. (J.A. at 327-328.) Schwam also
admitted in his deposition that he did not know what percentage of
revenue XO had orally promised to pay. Without knowing when and
how much money XO allegedly orally promised Schwam, it is near
impossible to enforce such a vague “contract.” There is also no
evidence that Ortega or any other officer of XO, expressly stated
that Schwam’s compensation would no longer be governed by the SIP.
Thus, in the absence of clear evidence that XO intended to modify
or supplement the SIP, we are constrained to enforce the SIP’s
detailed terms. See Stanley’s Cafeteria, 306 S.E.2d at 873
(holding that “mutual intent” to modify a contract “must be shown
by clear, unequivocal and convincing evidence” (internal quotation
marks omitted)).
Finally, we address Schwam’s argument that he is due the post-
termination commissions because the commissions constitute
compensation for previously rendered services. Again, we look to
the language of the SIP to determine whether Schwam is entitled to
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a percentage of the revenues generated from the contracts he
secured prior to his termination. The SIP does not provide for
post-termination commissions, as evidenced by the statement that a
salesperson is deemed terminated on the last day of work for
purposes of calculating commissions. The SIP also gives XO the
authority to deny commissions or to remove a salesperson’s
eligibility for commissions. Moreover, Schwam admitted in his
deposition that telecommunications companies do not usually pay
employees commissions for income received by the company after the
employee is terminated. We therefore agree with the district court
that the SIP does not provide for the payment of post-termination
commissions.
III.
For the reasons given, we affirm the district court’s grant of
summary judgment to XO.
AFFIRMED
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