Gordon v. Service America Corp

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BRIAN L. GORDON; LYNNE C. MYLIN;
NOEL K. BEALE,
Plaintiffs-Appellants,
No. 95-3162
v.
SERVICE AMERICA CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frank A. Kaufman, Senior District Judge.
(CA-94-1014-K)
Argued: October 29, 1996
Decided: July 23, 1997
Before RUSSELL and ERVIN, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Michael Dale Oliver, BOWIE & JENSEN, Towson,
Maryland, for Appellants. John Desire Gianssello, III, ORRICK,
HERRINGTON & SUTCLIFFE, New York, New York, for Appellee.
ON BRIEF: Robert Richardson Bowie, Jr., BOWIE & JENSEN,
Towson, Maryland, for Appellants.
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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Brian K. Gordon, Lynne C. Mylin, and Noel K. Beale ("the appel-
lants") appeal the district court's grant of summary judgment in their
suit against their former employer, Service America Corporation.
I.
Appellants were employed as Directors of Sales for Service Ameri-
ca's education division and were responsible for selling food service
and catering contracts to schools and colleges. They also helped in
client retention, known as a "rebid." Each appellant received compen-
sation in the form of a base salary. If appellants surpassed certain
sales goals set by Service America, they were entitled to bonuses, or
"incentive pay." The conditions surrounding the achievement and
payment of incentive pay were detailed in an agreement between the
appellants and Service America, the Incentive Compensation Program
("ICP").
The ICP contained four provisions relevant to this appeal. First, the
ICP required that participants be actively employed on the last day of
an "accounting period" to qualify for an award. Second, the ICP pro-
vided that if an account was terminated for any reason, Service Amer-
ica would no longer award incentive pay for that account. Third, the
ICP stated that bonuses would be paid only on "actual revenues."
Finally, the ICP included a provision titled "interpretation." That pro-
vision read: "This Plan does not confer or create any rights for
employees or any duties upon Service America Corporation. The Cor-
poration will make the interpretations concerning the conditions and
qualifications covered under this Plan. The Corporation reserves the
right to modify, amend and discontinue the [P]lan at any time."
On July 30, 1993, Service America sold its education division to
an unrelated third party. Appellants concede that they were at-will
2
employees, and that upon the sale of the division their employment
with Service America ended. Following the sale, Service America did
not pay any more incentive compensation to the appellants.
Appellants filed suit in Maryland state court to recover the incen-
tive compensation to which they believed they were entitled. Service
America removed the action to federal district court. Service America
moved for summary judgment on three grounds. First, it argued that
appellants Beale and Mylin had no cause of action under the Mary-
land Wage Payment and Collection Law1 because they did no busi-
ness in Maryland on behalf of Service America, and they had no other
connection to Maryland. Second, it argued the appellants had not
stated a valid cause of action. Finally, it argued appellants had no
recovery in quantum meruit because the terms of the ICP governed
the rights of the parties as to commissions and incentive compensa-
tion. The district court granted summary judgment in favor of Service
America. Gordon, Mylin and Beale appeal the legal conclusions
reached by the district court in its summary judgment decision.
We review a grant of summary judgment de novo . Summary judg-
ment is appropriate when the moving party is entitled to judgment as
a matter of law, and there is no genuine issue of material fact in dis-
pute. We sit in diversity in this case, and apply Maryland law.
II.
Under Mayland law, contract interpretation is a matter for the courts.2
When the language of a contract is plain and unambiguous, there is
no room for construction and the parties are presumed to have meant
what the agreement states.3 Ambiguity only exists if a reasonably pru-
dent person could find more than one meaning of a term, not when
one of the parties simply disagrees as to the meaning of the term.4
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1 Maryland state law allows an employee to sue for unpaid wages. Md.
Code Ann., Lab. & Empl. § 3-505, 3-507.1 (1991 & Supp. 1995).
2 Suburban Hosp. Inc. v. Dwiggins , 596 A.2d 1069, 1075 (Md. 1991).
3 Board of Trustees v. Sherman , 373 A.2d 626, 629 (Md. 1977).
4 Board of Educ. v. Plymouth Rubber, 569 A.2d 1288, 1296 (Md. Ct.
Spec. App. 1990).
3
Furthermore, Maryland law requires that a contract be read in its
entirety. That is, courts should not interpret a portion of a contract in
such a manner as to render other parts of the contract meaningless.5
We believe the relevant terms of the ICP are stated in clear and unam-
biguous language. Therefore, the ICP controls the outcome of this
appeal.
The ICP states that an employee must be employed by Service
America on the last day of an accounting period to be entitled to
bonus payments. It further provides that bonuses will be paid only on
"actual revenues," and that no bonuses will be paid if an account stops
being an account of Service America.
The appellants were not employees of Service America on the
applicable date. When Service America sold the division, the appel-
lants had left the employ of Service America and became employees
of the buyer. Likewise, the accounts that were sold were no longer
Service America accounts. Finally, "actual revenue" in this context
can only mean income generated from ongoing operations, not pay-
ment received for the sale of an asset. These are the plain and unam-
biguous meanings of these terms as applied to the facts of this case.
Appellants raise three arguments to defeat the district court's anal-
ysis, which parallels our own. They first argue that Service America
voluntarily sold the division, making it impossible for appellants to
be employed on the proper date, and this condition of the contract
should be excused.
Appellants' contention fails. When a condition is stated in unmis-
takable language, as this condition was, it should not be excused to
avoid a forfeiture.6 Moreover, when foreseeable events arise that ren-
der fulfillment of a condition an impossibility, excuse of the condition
is not warranted.7 The appellants were at-will employees, they knew
the terms of the ICP, and that Service America had the right to sell
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5 Sagner v. Glenangus Farms, Inc. , 198 A.2d 277, 283 (Md. 1964).
6 Restatement (Second) of Contracts § 227 cmt. b, § 229 cmt. a (1981).
Appellants' reliance on § 227 is self-defeating.
7 Stone v. Stone, 368 A.2d 496, 501 n.2 (Md. Ct. Spec. App. 1977).
4
its business if it so chose. Thus, appellants could have anticipated
events that led to their not being employed on the last day of an
accounting period. Our finding makes it unnecessary to address appel-
lants' other contentions on their breach of contract claim.
Appellants also assert they are entitled to recover in quantum
meruit. On this theory, they believe the bonuses should be paid
because they worked hard at their jobs and expected to be paid. How-
ever, Mayland law requires the plaintif asserting quantum meruit to
show an express or implied agreement to pay for the services.8 Here,
the ICP and its terms form the express agreement. The ICP clearly
indicated the circumstances under which Service America would and
would not make payment. This argument fails.
Finally, appellants rely on the Maryland Wage Payment and Col-
lection statute. That statute provides a mechanism for terminated
employees to collect earned compensation after termination. Here,
because the ICP governs, there is no compensation for the appellants
to collect. Thus, they have no cause of action under the statute.
III.
For the foregoing reasons, the judgment below is affirmed.
AFFIRMED
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8 Prince George's County v. Chillum-Adelphi Volunteer Fire Dep't.,
340 A.2d 265, 274 (Md. 1975) (citation omitted).
5