Vassar Group, Inc. v. Heeseon Ko ( 2019 )

REVERSE and REMAND; and Opinion Filed August 9, 2019.
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-18-00814-CV
VASSAR GROUP, INC., Appellant
V.
HEESEON KO, Appellee
On Appeal from the 14th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-17-02575
MEMORANDUM OPINION
Before Justices Schenck, Osborne, and Reichek
Opinion by Justice Schenck
Vassar Group, Inc. d/b/a Dawn Energy Consulting (“DEC”) appeals the trial court’s order
granting summary judgment in favor of Heeseon Ko (“Ko”) on her breach of contract claim in a
dispute over commission payments. DEC urges the trial court erred in granting summary judgment
in favor of Ko, and in impliedly denying its own counter motion for summary judgment, on Ko’s
breach of contract claim. More particularly, DEC claims Ko failed to prove her entitlement to
commissions and DEC conclusively established it has no obligation to pay Ko post termination of
her employment. We conclude, as a matter of law, neither party proved its position as it relates to
Ko’s breach of contract claim. Thus, the trial court erred in granting summary judgment in favor
of Ko. We reverse the trial court’s judgment granting Ko summary judgment on her breach of
contract claim and remand the cause to the trial court for further proceedings consistent with this
opinion. Because all issues are settled in law, we issue this memorandum opinion. TEX. R. APP.
P. 47.4.
BACKGROUND
DEC sells long-term energy contracts and subsequently receives monthly recurring
revenue from its customers over the life of the contracts. On June 1, 2015, DEC hired Ko as an
administrative assistant and she entered into a Confidentiality, Nondisclosure, and Invention
Agreement (“NDA”) with DEC. In addition to confidentiality and nondisclosure obligations, the
NDA addresses compensation. The compensation provision provides Ko, as “Contractor,” would
be paid a salary and commissions. More particularly, the NDA states:
Contractor and DEC agree that DEC shall pay Contractor: an annual salary of
$50,000.00 payable semi-monthly on the first (lst) day and the fifteenth (15th) day
of the month and subject to applicable federal, state, and local withholding. Upon
termination of this Contract, payments under this paragraph shall cease;
provided, however, that Contractor shall be entitled to payments for periods
or partial periods that occurred prior to the date of termination and for which
Contractor has not yet been paid, and for any commission earned in
accordance with DEC’s customary procedures, if applicable. This section of the
Contract is included only for accounting and payroll purposes and should not be
construed as establishing a minimum or definite term of employment. In addition,
DEC will make commission payments to Contractor based on the following: 30%
of NEW closed deals or 10% of RENEWAL closed deals of DEC by Claele Smith
capped at $35,000.00 for the period June 1, 2015 - May 31 , 2016 and capped at
$50,000.00 for the period June I, 2016 - May 31, 201 7. 70% of ALL closed deals
of Contractor will be paid, which shall be calculated separately from the
commission paid on DEC deals and shall not have a yearly cap. This commission
will be paid in accordance with the existing payment terms agreed upon by DEC
and suppliers. If Contractor dies during the term of this Contract, Contractor's
beneficiary shall be entitled to payments and commission payments for the period
ending with the date of Contractor’s death.
(emphasis added).
In early 2017, Claele Smith (“Smith”), DEC’s President, provided Ko with a revised
version of the NDA (“Proposed Agreement”). The Proposed Agreement contained terms Ko was
not willing to agree to, including a compensation package that was less favorable than the prior
one, and what Ko considered to be onerous termination terms. Ko expressed concerns to DEC
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over the Proposed Agreement. The parties reached an impasse on the form of the new agreement
and, on February 15, 2017, Ko emailed Smith stating “[s]ince you’ve given me no choice but to
either sign the new agreement . . . or you would terminate me, I will consider myself to be
terminated effective immediately.” Ko demanded payment of commissions she claimed were
owed.
When it became apparent DEC was not going to make any further payments, Ko sued DEC
asserting claims for breach of contract, quantum meruit, and unjust enrichment. DEC responded
with a general denial and counterclaimed alleging breach of contract, misappropriation of trade
secrets, and unlawful access of DEC’s computer network and system under Chapter 33 of the
Texas Penal Code and section 143.002 of the Texas Civil Practice & Remedies Code. DEC later
nonsuited its counterclaims. DEC filed a motion for traditional summary judgment on Ko’s breach
of contract, quantum meruit, and unjust enrichment claims. Ko filed her own motion for summary
judgment on her breach of contract claim only.
In its motion for summary judgment, DEC argued it was entitled to summary judgment on
Ko’s breach of contract claim claiming the evidence showed it did not breach the agreement
because, under the express language of the NDA and DEC’s customary procedures, Ko is not
entitled to commissions after termination of her employment. In support of its motion, and
response to Ko’s motion, DEC attached Ko’s original petition; the NDA; Ko and Smith’s email
correspondence concerning the Proposed Agreement; the transcript of Smith’s deposition; the
transcript of Smith’s then boyfriend, Nick Parker’s, deposition; and Smith’s affidavit in which she
states the basic facts of the case, describing Ko as an entry-level employee who sold only one
contract before she resigned in 2017, and for which Ko had already been compensated.
In her motion for summary judgment, and in response to DEC’s motion, Ko raised three
grounds for summary judgment in her favor and in defense of DEC’s motion: (1) the parties never
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terminated the NDA, meaning Ko was still entitled to receive the payments specified therein; (2)
even if the NDA terminated upon the termination of her employment, the NDA provides that Ko
is still entitled to commissions owed for “periods or partial periods that occurred prior to the date
of termination and for which Ko has not yet been paid;” and (3) Ko is entitled to commissions
under DEC’s customary procedure of paying commissions to terminated contractors.1 In support
of her motion, and her response to DEC’s motion, Ko attached the NDA; the Proposed Agreement;
excerpts from Smith’s deposition, in which she acknowledges that DEC was often paid months
after a deal closed; excerpts from the deposition of Parker, explaining he, Eduard Cheney, and
Sebastian Esquivel ran some deals through DEC; email correspondence between Ko and Smith;
and Ko’s affidavit in which she gives further background information, specifically stating DEC
never notified her the NDA was terminated, indicating that payments from energy providers would
not be received for months after DEC performed work for the provider, meaning commissions
would be paid many months after work was actually performed, and citing DEC’s “unwritten
policy” of paying employees (Parker, Cheney, and Esquivel) commissions after termination.
Additionally, in support of her claim DEC’s customary procedure was to pay commissions post
termination, Ko attached NDAs of former DEC contractors, and excerpts from the deposition of
Parker.
The trial court granted summary judgment in favor of Ko on the liability portion of her
breach of contract claim. The trial court granted summary judgment in favor of DEC on Ko’s
quantum meruit and unjust enrichment claims. Thereafter, the parties, by Rule 11 agreement,
stipulated to the amount of damages. Following a bench trial on attorney’s fees, the trial court
1
DEC challenges each of these grounds on appeal.
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entered a final judgment awarding Ko actual damages of $12,679.30, trial-court attorney’s fees of
$74,322.00, and conditional appellate attorney’s fees. This appeal followed.
DISCUSSION
In its first issue, DEC challenges the trial court’s grant of summary judgment in favor of
Ko and denial of DEC’s motion for summary judgment as to Ko’s breach of contract claim.
We review the granting of a summary judgment de novo. Learners Outline, Inc. v. Dallas
Indep. Sch. Dist., 333 S.W.3d 636, 640 (Tex. App.—Dallas 2009, no pet.). The standard of review
for a traditional summary judgment motion pursuant to Texas Rule of Civil Procedure 166a(c) is
threefold: (1) the movant must show there is no genuine issue of material fact and he is entitled to
judgment as a matter of law; (2) in deciding whether there is a disputed, material fact issue
precluding summary judgment, we must take as true evidence favorable to the nonmovant; and (3)
we must indulge every reasonable inference from the evidence in favor of the non-movant and
resolve any doubts in the nonmovant’s favor. Id.
When, as here, both parties move for summary judgment, each party bears the burden of
establishing that it is entitled to judgment as a matter of law; neither party can prevail because of
the other’s failure to discharge its burden. City of Garland v. Dallas Morning News, 969 S.W.2d
548, 552 (Tex. App.—Dallas 1998) (en banc), aff’d, 22 S.W.3d 351 (Tex. 2000). A reviewing
court may determine all questions presented; it may affirm the summary judgment entered, reverse
and render a judgment for the other party, if appropriate, or reverse and remand if neither party
has met its summary judgment burden. Hackberry Creek Country Club, Inc. v. Hackberry Creek
Home Owners Ass’n, 205 S.W.3d 46, 50 (Tex. App.—Dallas 2006, pet. denied).
In granting summary judgment in favor of Ko, the trial court did not specify the basis for
its ruling. Consequently, DEC, as the challenger of the trial court’s order, must show that each of
the independent grounds alleged in Ko’s motion is insufficient to support the order. See McMahon
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Contracting, L.P. v. City of Carrollton, 277 S.W.3d 458, 468 (Tex. App.—Dallas 2009, pet.
denied). In order to obtain reversal of the trial court’s denial of its motion for summary judgment,
DEC must establish there is no genuine issue of material fact and it is entitled to judgment as a
matter of law. See Ohio Cas. Ins. Co. v. Time Warner Entm’t Co., 244 S.W.3d 885, 887–88 (Tex.
App.—Dallas 2008, pet. denied).
DEC argues the trial court erred in granting Ko’s motion for summary judgment and in
denying its motion because Ko failed to prove her entitlement to commissions, the NDA mandated
that payment of commissions ended at termination except for commissions already earned, which
DEC claims it paid, and DEC’s customary procedure was not to pay commissions to contractors
after termination of their employment. These arguments challenge each of the grounds Ko asserted
for summary judgment and touch upon the arguments DEC made in support of its motion for
summary judgment on Ko’s breach of contract claim.
Ko’s breach of contract claim focuses on the NDA and its application to the facts presented
in this case. To prove a claim for breach of contract, a party must establish: (1) the existence of a
valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract
by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. McGraw v.
Brown Realty Co., 195 S.W.3d 271, 276 (Tex. App.—Dallas 2006, no pet.). A breach of contract
occurs when a party fails to perform an act that it has promised to perform. Hackberry Creek, 205
S.W.3d at 55.
In construing a written contract, we must ascertain and give effect to the parties’ intentions
as expressed in the instrument. Stephens v. Beard, 485 S.W.3d 914, 916 (Tex. 2016). To do so,
we consider the instrument as a whole. Id. We presume that the words of a contract reflect the
parties’ intent, but we must construe words in the context in which they are used. URI, Inc. v.
Kleberg Cty., 543 S.W.3d 755, 764 (Tex. 2018).
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If, after the pertinent rules of construction are applied, the contract can be given a definite
or certain legal meaning, it is unambiguous and courts should construe it as a matter of law. Frost
Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (per curiam). If a contract
is susceptible to more than one reasonable interpretation, it is ambiguous. Reilly v. Rangers Mgmt.,
Inc., 727 S.W.2d 527, 530 (Tex. 1987). Whether a contract is ambiguous is a question of law for
the court to decide by looking at the contract as a whole in light of the circumstances existing at
the time the contract was entered into. Id. at 529. A court may conclude a contract is ambiguous
even in the absence of such a pleading by either party. Sage St. Assocs. v. Northdale Constr. Co.,
863 S.W.2d 438, 445 (Tex. 1993). When a contract contains an ambiguity, granting summary
judgment based on the contract is improper because the intent of the contracting parties is an issue
of fact. Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983).
I. Termination of the NDA
DEC maintains the trial court erred in granting Ko summary judgment and in denying its
motion for summary judgment on her breach of contract claim because the summary judgment
evidence negates the existence of an agreement that could be the subject of a breach of contract
claim. More particularly, DEC contends that when Ko’s employment was terminated the NDA’s
compensation provision terminated as well. Thus, asserts DEC, the agreement upon which Ko
relies does not exist. Ko responds claiming the NDA was not terminated simply because her
employment terminated, so the cessation of payments terms in the compensation provision did not
take effect. Ko also contends DEC is estopped from claiming the NDA terminated because it
sought to enforce the NDA’s nondisclosure provisions after her employment terminated.
We recognize DEC filed a counterclaim seeking to enforce the confidentiality obligations
under the NDA. To consider DEC’s attempt to enforce the nondisclosure obligations under the
NDA to be a judicial admission the agreement remains in full force and effect it must be a clear,
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deliberate, and unequivocal statement to that effect. Horizon/CMS Healthcare Corp. v. Auld, 34
S.W.3d 887, 905 (Tex. 2000). We conclude that by asserting a counterclaim for an alleged
violation of the NDA, DEC made no clear and unequivocal assertion that the payment obligations
set forth in the NDA continued. See, e.g., Bliss & Glennon, Inc. v. Ashley, 420 S.W.3d 379, 393
(Tex. App.—Houston [1st Dist.] 2014, no pet.) (“It is the nature of an admission that by intention
it be act of waiver, and not merely a statement of assertion or concession, made for some
independent purpose”). Consequently, we turn to the NDA to determine whether it establishes, as
a matter of law, the agreement either remained in effect or terminated upon the termination of Ko’s
employment.
The NDA does not contain any provision for how and when any part of the agreement
would terminate. The compensation provision states “this section of the Contract is included only
for accounting and payroll purposes and should not be construed as establishing a minimum or
definite term of employment.” Consequently, the NDA itself does not answer the question
presented here and would require extrinsic evidence of the parties’ intent. In such a case, an
ambiguity exists, raising a fact issue for jurors to resolve. See Fless v. State Farm Lloyds, 202
S.W.3d 744, 748 (Tex. 2006).
Consequently, there is a genuine issue of material fact as to whether termination of Ko’s
employment terminated any part of the NDA. Thus, a fact issue remains as to what effect Ko’s
termination has on her right to receive the compensation specified in the NDA. See Fulcrum Cent.
v. Auto Tester, Inc., 102 S.W.3d 274, 278 (Tex. App.—Dallas 2003, no pet.).
II. Earned Commissions
DEC further challenges the trial court’s grant of summary judgment in favor of Ko, and
denial of its motion for summary judgment, on Ko’s breach of contract claim based on Ko’s
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assertion that, even if the NDA terminated upon the termination of her employment, the NDA
provided for payment post termination.
As to post termination of the agreement, the NDA provides: “Upon termination of this
Contract, payments under this paragraph shall cease; provided, however, that Contractor shall be
entitled to payments for periods or partial periods that occurred prior to the date of termination and
for which Contractor has not yet been paid, and for any commission “earned” in accordance with
DEC’s customary procedures, if applicable.” The parties have differing theories as to when a
commission is “earned” and payable post termination.
DEC’s theory is that a commission is earned when DEC receives payment from the client,
not when the client enters into an agreement requiring it to make future payments. In support of
this theory, DEC relies on portions of Smith’s deposition in which she maintains that DEC’s
independent contractors receive their commissions when DEC receives payments from its
customers and that commissions are not earned at the closing of the deals. Thus, DEC urges it
only owed Ko commissions from customer payments received before Ko’s employment
terminated. DEC claims that while DEC may receive payments post termination of Ko’s
employment from deals Ko worked on, those are not payments that Ko “earned” prior to the
termination of her employment.
In contrast, Ko’s theory is that a commission is earned once she or Smith closed a deal and
that the timing of the payment was just a function of when DEC received payment from the
provider. Ko established through her affidavit that DEC would receive recurring payment from a
single sale resulting in a revenue stream from which commissions would be paid months after the
work was actually contracted for and performed. She further established that DEC was still
receiving client payments from deals Ko helped Smith close prior to the termination of her
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employment and that she had not been paid her commission on those payments. Ko contends she
is entitled to commissions on those payments DEC received after her employment terminated.
The term “earned” is not defined in the NDA and the parties have presented plausible and
conflicting evidence on the meaning of the term. Accordingly, the contract is susceptible to at
least two reasonable interpretations. Consequently, the contract is ambiguous, creating a fact issue
on the parties’ intent. See United Protective Servs. Inc. v. W. Vill. Ltd. P’ship, 180 S.W.3d 430,
432 (Tex. App.—Dallas 2005, no pet.) (holding that genuine issue of material fact as to parties’
intent regarding requirement for notice to terminate contracts precluded entry of summary
judgment); Coker, 650 S.W.2d at 393 (“When a contract contains an ambiguity, the granting of a
motion for summary judgment is improper because the interpretation of the instrument becomes a
fact issue”). Accordingly, neither party has established their entitlement to summary judgment on
the cessation of payment terms of the compensation provision.
III. DEC’s Customary Procedure for Post-Termination Payments
DEC further claims the trial court erred in granting summary judgment in favor of Ko, and
in denying its motion, on Ko’s breach of contract claim because its customary procedure was not
to pay former contractors after their employment terminated.
With respect to DEC’S “customary procedure,” Ko presented evidence that three
individuals, namely Parker, Cheney, and Esquivel, signed NDAs with DEC, containing
compensation provisions, and received commission payments post termination. DEC countered
with Smith’s testimony denying that the three contractors were operating under DEC’s customary
procedures. She claimed Parker was starting his own company and, while he was in the process
of doing so, asked Smith to let him, and his sales persons—Cheney and Esquivel—run deals
through DEC’s accounting system. Smith claimed DEC paid Parker the funds from any deals that
he or his employees closed, and Parker distributed the money to Cheney and Esquivel based on
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agreements he had with them. DEC argues that commission payments to Parker, Cheney, and
Esquivel, post termination of their contracts with DEC, are the result of Parker’s agreement with
his contractors and do not reflect DEC’s customary procedures. DEC further established through
Smith’s testimony that another administrative employee, similar to Ko, who received flat-fee
bonuses of ten to fifteen dollars for every deal that Smith closed, received no further payment after
his employment terminated.
While Smith essentially denies a direct relationship between DEC and Parker, Cheney, and
Esquivel, seeking to negate a customary procedure, the summary judgment record includes NDAs
between DEC and Parker, Cheney, and Esquivel, and there is evidence they received payments
post termination. The fact that one administrative employee, who was receiving flat-fee bonuses,
not commissions, did not receive payment post termination does not conclusively establish a
“customary” procedure with respect to commissions payable to Ko. Consequently, based on the
record before us, there is at least a fact issue concerning DEC’s customary procedure concerning
commission payments. Accordingly, neither Ko nor DEC conclusively established their right to
summary judgment by virtue of the company’s customary procedures. See Hightower v. Baylor
Univ. Med. Ctr., 251 S.W.3d 218, 221–22 (Tex. App.—Dallas 2008, pet. struck).
Given we have determined the summary evidence presents a genuine issue of material fact
for determination by the trier of fact, we conclude the trial court erred in granting Ko’s motion for
summary judgment and did not err in denying DEC’s motion for summary judgment on Ko’s
breach of contract claim. We sustain DEC’s first issue as to summary judgment in favor of Ko on
her breach of contract claim. We overrule DEC’s second issue as to the denial of its motion for
summary judgment on Ko’s breach of contract claim.
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Because summary judgment in favor of Ko was improper, it was likewise improper to
award her attorney’s fees. To recover attorney’s fees a party must prevail on its cause of action.
Sharifi v. Steen Auto., L.L.C., 370 S.W.3d 126, 152 (Tex. App.—Dallas 2012, no pet.).
CONCLUSION
We reverse the trial court’s judgment granting summary judgment in favor of Ko and
remand the cause to the trial court for further proceedings consistent with this opinion.
/David J. Schenck/
DAVID J. SCHENCK
JUSTICE
180814F.P05
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
VASSAR GROUP, INC., Appellant On Appeal from the 14th Judicial District
Court, Dallas County, Texas
No. 05-18-00814-CV V. Trial Court Cause No. DC-17-02575.
Opinion delivered by Justice Schenck.
HEESEON KO, Appellee Justices Osborne and Reichek participating.
In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and this cause is REMANDED to the trial court for further proceedings consistent
with this opinion.
It is ORDERED that appellant VASSAR GROUP, INC. recover its costs of this appeal
from appellee HEESEON KO.
Judgment entered this 9th day of August, 2019.
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