Wells Fargo, etc. v. VEC and Claude Collier, Jr ( 1997 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Benton, Elder and Senior Judge Cole
Argued at Richmond, Virginia
WELLS FARGO ALARM SERVICES, INC.
OPINION BY
v. Record No. 1051-96-2 JUDGE JAMES W. BENTON, JR.
MARCH 25, 1997
VIRGINIA EMPLOYMENT COMMISSION and
CLAUDE H. COLLIER, JR.
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Melvin R. Hughes, Jr., Judge
James Emmett Anderson for appellant.
Lisa J. Rowley, Assistant Attorney General
(James S. Gilmore, III, Attorney General;
W. Rand Cook; McCaul, Martin, Evans & Cook,
on brief), for appellees.
Wells Fargo Alarms Services, Inc., appeals from a decision
of the trial judge affirming a ruling of the Virginia Employment
Commission. Wells Fargo argues that (1) the trial judge erred in
affirming the commission's finding that Claude H. Collier's
conduct did not constitute misconduct for purposes of Code
§ 60.2-618(2); (2) Wells Fargo did not condone Collier's conduct;
(3) the commission erred in denying Wells Fargo's request to
present additional evidence; and (4) the trial judge erred in
refusing to remand the case to the commission for a hearing to
determine whether the commission's decision was procured by
extrinsic fraud. For the reasons that follow, we affirm the
trial judge's decision.
I.
Wells Fargo sells and installs fire alarms and security
systems. Claude H. Collier began his employment as a sales
representative in Wells Fargo's Richmond office on September 9,
1991. Collier was discharged on April 22, 1994, for failure to
follow company policy, and he filed a claim for unemployment
compensation. The commission's deputy granted Collier
compensation. Wells Fargo appealed from that decision.
The evidence at the appeals examiner's hearing proved that
in 1992 Collier conducted extensive negotiations to obtain Allied
Signal as a Wells Fargo customer. Allied Signal had been
serviced by one of Wells Fargo's competitors for twenty-five
years. When Collier learned that Allied Signal no longer wanted
to use the services of the competitor, he began negotiating a
transaction valued at $500,000. Because Collier was a relatively
new employee, his "branch manager . . . was fully aware of every
transaction that [he] was going through in negotiating" with
Allied Signal. Collier testified that "Allied [Signal] was in
the process of revamping [its] entire system" and would switch to
Wells Fargo only "at a certain price." Collier also testified
that after he showed his branch manager the documents about the
cost of the job and informed him about the amount Allied Signal
was willing to pay, his branch manager said, "Well, when we do a
takeover from another company, [it] can't go in as a direct sale.
It has to go in as a leased system because of the investment."
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Collier further testified that a contract was not prepared
because his branch manager stated, "We will not enter into a
contract at this time because we don't know how this thing is
[going to] wind-up."
Collier testified that because of the structure of the
transaction his branch manager had to obtain the approval of the
district sales manager, Bill Winter. Collier also testified that
he and the branch manager informed Winter of the transaction,
sent him information by facsimile, and generally kept him
informed. Collier testified that Winter approved the
transaction. Collier further testified that after the
transaction was approved, the following occurred:
I was called in to say, "Okay. This is how
the job's gonna go." [The branch manager]
said, "We will go with that figure." And
that figure was $325,000.00 for the
installation, which is money up front to
Wells Fargo, and $40,000.00 to be paid to us
annually. A purchase order was written from
Allied Signal to Wells Fargo explaining
exactly that.
Collier testified that the branch manager, the applications
engineer, and the accounting coordinator, the individual who
calculated Collier's commissions, also approved the transaction.
Collier stated that three of his supervisors had to give their
approval before he was paid.
Wells Fargo's representative at the hearing was Thomas N.
Griffin, Jr., the current general manager for Wells Fargo's
Washington D.C. office and a former general manager of the
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Richmond office. Although Griffin had little personal knowledge
of Collier's case, he testified that "on a job this large, it
would be very unusual for folks at much higher places not to know
about it" and that "it's fair to say . . . the job could not have
been approved without . . . folks above [Collier] knowing about
it." He also testified "that normally when we takeover something
[from a competitor], we take over with a lease . . . [because]
you try to go in with as an attractive . . . composition as you
can, in order to make the fellow feel it is an attractive
alternative to what he already has." He further testified that
"the general manager must approve sales commissions."
After Wells Fargo's auditors raised questions regarding the
transaction, a meeting was held among Collier, other employees at
the Richmond branch, lawyers, and corporate officials. Collier
testified that he and another employee were "instructed not to
say anything" at that meeting.
Wells Fargo contended that Collier improperly treated the
transaction, which should have been a lease-purchase arrangement,
as a lease. Wells Fargo argued that, as a consequence, Collier
was overpaid $11,570 in commissions and $5,021 in bonuses because
under its commission policy sales representatives receive a
greater commission for a lease than a sale. Wells Fargo also
asserted that Collier failed to follow company policy because he
used purchase orders that were submitted by Allied Signal and
failed to execute Wells Fargo's approved, written contract in
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making the transaction with Allied Signal.
Based upon evidence at the hearing, the appeals examiner
found that Collier "did not misrepresent any facts to [Wells
Fargo]" and that the "[m]isrepresentations were made by
[Collier's] superiors." The appeals examiner affirmed the
decision of the deputy that Collier was qualified to receive
unemployment compensation.
Wells Fargo appealed that decision and requested that the
commission take additional evidence. The commission denied Wells
Fargo's request to take additional evidence. In ruling on the
merits of the appeal, the commission found that Collier's
"involvement in the [Allied Signal] transaction was monitored by
[Collier's] superiors, including his supervisor, the accounting
coordinator, and the branch manager [and that the] transaction
was also coordinated by the branch manager." The commission
further found that Collier "believed that approvals for certain
aspects of the transaction had been obtained from the district
sales manager." The commission also noted that Wells Fargo
"presented no evidence of the policies which [Collier] is alleged
to have violated." Although the commission stated that Collier
demonstrated poor judgment by remaining silent as instructed at
the meeting with Wells Fargo's lawyers, the commission found that
"this alone is not sufficient to establish that [Collier]
breached his duty of loyalty or honesty to the company." In view
of the involvement of Collier's supervisors, the commission
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concluded that Wells Fargo "did not present sufficient evidence
to establish that [Collier] was guilty of misconduct connected
with work."
Wells Fargo appealed to the circuit court. After the trial
judge affirmed the commission's findings, Wells Fargo filed a
timely appeal to this Court.
II.
Wells Fargo first argues that the commission erred in
finding that Wells Fargo failed to prove Collier engaged in
misconduct. We disagree.
"Initially, we note that in any judicial proceedings 'the
findings of the commission as to the facts, if supported by
evidence and in the absence of fraud, shall be conclusive, and
the jurisdiction of the court shall be confined to questions of
law.'" Israel v. Virginia Employment Comm'n, 7 Va. App. 169,
172, 372 S.E.2d 207, 209 (1988) (citations omitted). In accord
with our usual standard of review, we "consider the evidence in
the light most favorable to the finding by the Commission."
Virginia Employment Comm'n v. Peninsula Emergency Physicians,
Inc., 4 Va. App. 621, 626, 359 S.E.2d 552, 554 (1987).
Furthermore, the following principle is well established:
[A]n employee is guilty of "misconduct
connected with his work" when he deliberately
violates a company rule reasonably designed
to protect the legitimate business interests
of his employer, or when his acts or
omissions are of such a nature or so
recurrent as to manifest a willful disregard
of those interests and the duties and
obligations he owes his employer.
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Branch v. Virginia Employment Comm'n, 219 Va. 609, 611, 249
S.E.2d 180, 182 (1978). "Whether an employee's behavior
constitutes misconduct, however, is a mixed question of law and
fact reviewable by this court on appeal." Israel, 7 Va. App. at
172, 372 S.E.2d at 209.
Wells Fargo argues that Collier violated its policies by
structuring the Allied Signal transaction as a lease and by
failing to use an approved Wells Fargo contract in the
transaction. We agree with the commission's finding that Wells
Fargo "presented no evidence of the policies that [Collier] is
alleged to have violated." Moreover, the evidence proved that
when Collier began negotiations with Allied Signal, he reported
to his branch manager. Collier described the details of the
negotiations to the branch manager and thereafter followed the
instructions given to him by the branch manager. The evidence
further proved that the details of the transaction were reported
to the district sales manager, who also approved the transaction.
Thus, even if Collier violated company policy, the evidence
proved that Collier's conduct was at all times authorized and
directed by his superiors. Because Collier was following the
instructions of his immediate supervisor, Collier's deviation
from the rule was authorized.
Although misconduct may be established by proving "an act or
omission showing willful disregard of the employer's interest,"
Branch, 219 Va. at 611, 249 S.E.2d at 182, we cannot ignore the
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factual circumstances and say as a matter of law that an
employee's conduct is not excused when the employee follows a
supervisor's orders to deviate from a rule. The commission found
and the evidence proved that the transaction, which involved the
transfer of potentially profitable business from a competitor,
was approved by Collier's immediate supervisor and also Wells
Fargo's district manager. Collier's supervisors' approval could
only have suggested to Collier that he was advancing Wells
Fargo's interests. Therefore, we cannot say that the record
necessarily proved that Collier engaged in misconduct.
Accordingly, we hold that the evidence supports the commission's
decision.
III.
Wells Fargo next asserts that Collier failed to prove that
Wells Fargo condoned Collier's conduct. Because Wells Fargo
failed to prove that Collier engaged in misconduct, the burden
never shifted to Collier to introduce evidence in mitigation.
See Virginia Employment Comm'n v. Gantt, 7 Va. App. 631, 635, 376
S.E.2d 808, 811, aff'd on reh'g en banc, 9 Va. App. 225, 385
S.E.2d 247 (1989). Therefore, we need not consider the issue of
condonation, because the commission properly declined to rule on
that issue.
IV.
Wells Fargo also argues that the commission erred in
refusing to reopen the record for additional evidence. We
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disagree.
The commission's regulations state as follows:
The commission, in its discretion, may direct
the taking of additional evidence after
giving written notice of such hearing to the
parties, provided:
1. It is shown that the additional evidence
is material and not merely cumulative,
corroborative or collateral, could not have
been presented at the prior hearing through
the exercise of due diligence, and is likely
to produce a different result at a new
hearing; or
2. The record of proceedings before the
appeals examiner is insufficient to enable
the commission to make proper, accurate, or
complete findings of fact and conclusions of
law.
16 VAC 5-80-30(B) (formerly VR 300-01-08 § 3(B)).
After the hearing, Wells Fargo sought to introduce before
the commission (1) "documents pertaining to an unsuccessful wage
claim which . . . [Collier] perfected with the Virginia
Department of Labor and Industry," and (2) "documents supporting
the contention of Wells Fargo that [Collier] was discharged for
cause." Wells Fargo stated that it failed to introduce the
evidence at the hearing because (1) the "bifurcation of duties
[within Wells Fargo's management structure] . . . prevented all
interested corporate officials at Wells Fargo . . . from having
any direct knowledge of all ongoing employment matters concerning
[Collier];" (2) at the time the hearing was scheduled, the Wells
Fargo official who coordinated the hearing with the commission
was unaware that Wells Fargo's key witnesses would be
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unavailable; and (3) the Wells Fargo employee who appeared at the
hearing had, at best, second-hand knowledge of the facts of this
case.
Finding that "the additional documents and other evidence
could have been presented at the Appeals Examiner's hearing
through the exercise of due diligence," the commission denied the
motion to reopen the record. The commission also found that the
record was adequate "to enable the Commission to make proper,
accurate and complete findings of fact and conclusions of law."
Because the evidence supports the commission's findings, we hold
that the commission did not abuse its discretion in refusing to
accept additional evidence. See Old Dominion Elec. Coop. v.
Virginia Elec. and Power Co., 237 Va. 385, 394-98, 377 S.E.2d
422, 427-29 (1989).
V.
Wells Fargo further contends that the trial judge erred in
refusing to remand the case to the commission for a hearing on
Wells Fargo's claim of extrinsic fraud. Because the proffer was
insufficient to establish a prima facie case of extrinsic fraud,
we hold that the trial judge did not err.
Extrinsic fraud is "conduct which prevents a fair submission
of the controversy to the court." Jones v. Willard, 224 Va. 602,
607, 299 S.E.2d 504, 508 (1983). Wells Fargo argues that Collier
committed extrinsic fraud by concealing corporate records, acting
in concert with his supervisor in a plan to deceive corporate
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officials, and submitting documents to Allied Signal. The trial
judge found that "whether these matters involve extrinsic fraud
is of no moment [because] [t]hey were covered extensively in the
hearings which afforded Wells Fargo an opportunity to present its
position on them." The trial judge concluded that a remand was
unnecessary because "Wells Fargo ha[d] not made out a prima facie
case of extrinsic fraud as contemplated by Va. Code § 60.2-625
and Jones v. Willard, 224 Va. 602, 299 S.E.2d 504 (1983)."
The documents that Wells Fargo alleges Collier concealed
were found in Collier's desk, at Well's Fargo's Richmond office,
after August 25, 1994. However, Collier had been discharged four
months earlier, in April 1994. Wells Fargo clearly had access to
the documents after Collier's termination in April. Thus, we
cannot say that Collier engaged in conduct that prevented a fair
resolution of the case.
For these reasons, the judgment is affirmed.
Affirmed.
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