Fudali v. Pivotal Corporation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
MARJORIE FUDALI,
Plaintiff,
v Civil Action 03-1460 (Jl\/IF)
PIVOTAL CORPORATION,
Defendant.
MEMORANDUM OPINION
A jury trial in this case began on October 22, 2007, and concluded on October 26, 2007,
with a verdict favorable to the plaintiff The parties dispute the amount of damages that should
flow from thejury’s verdict, and have submitted briefs in support of their respective positions.
See, e.g., Plaintiffs Statement of Damages Calculation ("Calc."); Defendant Pivotal
Corporation’s Response to Plaintiff l\/lariorie Fudali’s Statement of Damages Calculation
("Opp."); Plaintiff l\/Iariorie Fudali’s Response to Defendant Pivotal Corporation’s Response to
Plaintiff Mariorie Fuda|i’s Statement of Damages Calculation ("Reply"). A hearing was held on
lvlay 12, 2008, and the Court now turns to the issues that separate the parties.
I.
At the close ofthe plaintiffs case in chief, and again before this case was submitted to
thejury, Pivotal moved forjudgment as a matter of law on two issues: (l) whether Pivotal’s
agreement with Syngenta contained extended payment terms, and (2) whether plaintiffs
recovery was limited to commissions based on revenue from licenses and 12 months of
maintenance contracts The Court twice denied defendant’s motions so that these issues would
be submitted to thejury for its consideration. The Court noted that defendant was free to move
to set aside the verdict should the verdict be unfavorable to its position.
In its reply to plaintiffs damages calculation, defendant seeks to renew its Rule 50
motion. However, this is not an appropriate procedural posture to challenge thejury’s verdict.
lnstead, defendant should renew its motion within 10 days of the entry ofjudgment, which has
not yet occurred. S_e_e_ Fed. R. Civ. P. 50(b). As these issues are not ripe for decision, l will
reservejudgment on them until such time as a motion is properly filed.
II. Contractual Issues
A. OEM Royalties
The defendant challenges the plaintiffs inclusion of [REDACTED] in OEM royalties in
the calculation of commissionable revenue because "Pivotal earned nothing from these
amounts." Opp. at l0. Pivotal has described OEM royalties as:
amounts that Pivotal must pay to other companies who
manufacture software that Pivotal uses in implementing its
software for customers. These funds thus effectively pass
through Pivotal from Pivotal’s customers to the OEl\/I, with
Pivotal making no money on these royalties.
Pl. Exh. 39] at 6; see also Opp. at 2 ("Pivotal was obligated to pay [REDACTED] to third-parties
for OEM royalties for other software included in the software Pivotal was selling to Syngenta.").
The plaintiff argues in response that Jim Warden testified that OEM royalties were not
ordinarily deducted from commission payments, and that no evidence was offered by the
defendant to contradict that testimony. Reply at 5. Documentary evidence was introduced to
support defendant’s argument, however. First, Paragraph 6.6 of the incentive Compensation
Plan FYZOOZ states that "commissions on any sale will be calculated net of any OEM Fees
l A|l exhibits cited in this Opinion refer to trial exhibits.
2
Pivotal must pay with respect to that sale." Pl. Exh. 4 ‘ll 6.6. Second, the "Syngenta
Commission Calculation Worksheet" describes in detail the OEM royalties to be deducted from
the Syngenta deal. Pl. Exh. 3 l. In response, the plaintiff points to the Olsen memorandum,z
entitled "Revenue Recognition on Syngenta Contract," as evidence that the OEM royalties were
never paid. Pl. Exh. 40. But the Olsen memo, as the title indicates, focuses on revenue
recognition; Paragraph 6.6 ofthe incentive Compensation Plan FY2002 indicates that this
amount differs from the amount ofa sale that is commissionable. Pl. Exh. 4 at 11 6.6; g §§ i_d_.
at ‘|i 6.2(c) (commission based on "commissionable fees").
To the extent that this question requires a weighing of competing evidence and a finding
of fact, the Court notes that the plaintiff did not request in her proposed verdict form that thejury
make that determination, Verdict Form [#99], and no objection was raised by her to the final
verdict form’s silence as to OEM interest. Verdict Form [#102]; Transcript, Oct, 24, 2007; §
§ Fed. R. Civ. P. 49(a)(3) ("A party waives the right to ajury trial on any issue of fact raised
by the pleadings or evidence but not submitted to the jury unless, before thejury retires, the
party demands its submission to thejury."). Nor did she raise an objection to thejury
instructions, which were similarly silent in regard to OEM royalties. jury instructions [#104];
Le_ ;Ls_g Fed. R. Civ. P. 5 l (d) (party cannot assign as error a failure to give an instruction unless
that instruction was requested by the party). Because plaintiff did not demand that the issue of
OEM royalties be submitted to thejury, she has waived her right to ajury determination on that
issue, and the Court is permitted to make a factual finding. Fed. R. Civ. P. 49(a)(3) ("Ifthe party
does not demand submission, the court may make a finding on the issue."). Based on the
2 Errol Olsen authored a memorandum on April 29, 2002 to "outline the accounting issues and proposed revenue
recognition treatment for the Syngenta contract." Pl. Exh. 40.
3
evidence, I find that OEM royalties in the amount of [REDACTED] were paid by Pivotal and
should be excluded in the calculation ofthe plaintiffs final judgment.
B. Pre-Existing Maintenance Obliga_tions
Defendant also challenges the plaintiffs inclusion of [REDACTED] in pre-existing
maintenance obligations in her damages calculation, Opp. at l l. Defendant notes that the
Global Agreement between Pivotal and Syngenta states "the parties acknowledge and agree that
the sum of [REDACTED] applies to maintenance and support services for the Existing Syngenta
(and Syngenta Entities) installed and Purchased Software Base for the period to 31/3/04." Pl.
Exh. 33 at 32. Plaintiff has not offered any evidence to contradict the Global Agreement’s
assertion that this portion of the maintenance charges billed to Syngenta were attributable to
other previous sales. instead, plaintiff argues that Pivotal did not deduct this figure from its
calculations in the Olsen memorandum, Pl. Exh. 40, or the commission calculation sheet, Pl.
Exh. 31, and therefore should not be permitted to deduct them now.
However, the Olsen memorandum specifically discusses the pre-existing maintenance
obligation in the section entitled "Revenue Treatment.” Pl. Exh. 40 at 2. The memo notes that
the "post deployment PCS renewal rate of [REDACTED] includes PCS for pre-2002 licenses
worth approximately [REDACTED]." i_d. This refers to one half of the [REDACTED] figure
included in the contract. Unfortunately for the accuracy ofthe ensuing calculations, the Olsen
memorandum performs subsequent calculations using the estimated figure of [REDACTED]
rather than the actual [REDACTED]. The memo deducts [REDACTED] from the
[REDACTED] figure to arrive at [REDACTED] as the yearly maintenance obligation that arose
out ofthe deal in question. Ld. The memo further explains that only 80.5 percent oflicenses
were purchased in 2002; 80.5 percent of [REDACTED] equals [REDACTED]. I_869 A.2d 343, 361 (D.C. 2005) (court is to
"look first to the actual language of the contract and give that language its plain meaning."). She
argues that she should receive the override because Syngenta "made clear" that it "would be
paying" pursuant to the Global Agreement, and that the Global Agreement demonstrated that
Syngenta "intended to be bound to Pivotal" for the full amount ofthe deal. Reply at 7. The
Override Clause clearly requires simultaneous payment for the override to be awarded, and it is
consequently irrelevant what Syngenta "would" do or "intended" to do. Similarly, the plaintiffs
argument that the Override Clause should be read to award the override "on all business she
closed" is thoroughly unsupportable, as it would require the Court to disregard the latter halfof
the clause, whereby "payment is received simultaneously with contract execution or receipt of
purchase order.” Pl. Exh. 4 1] 3; see also Air Line Pilots Ass’n int’l v. Pension Benefit Guar.
L;L, 193 F. Supp. 2d 209, 218 n.4 (D.D.C. 2002) (contracts are to be read "so that no word,
clause, sentence, or phrase is rendered surplusage, superfluous, meaningless or nugatory")
(internal quotation omitted). Because payment was not received by Pivotal "simultaneously with
contract execution or receipt of purchase order," the judgment will not include a l% override.
Pl. Exh. 4 at § 3.
D. Quota Bonuses
Plaintiff argues that she is entitled to be paid $10,000 for her Third and Fourth Quarter
Bonuses. Calc. at 5 . Defendant does not respond to plaintiff’s request. Because defendant does
not object to the bonuses, i will take the point as conceded and find that plaintiff is entitled to be
compensated in the amount of$l0,000 in unpaid quarterly bonuses.
III. Extracontractuallssues
A. Vacation Time and Tw0 Weeks Notice
Plaintiff seeks to recover "unused vacation time in the amount of $3,591 and the balance
oftwo weeks notice in the amount of $628." Calc. at 5. Defendant argues that plaintiff is not
entitled to recover these damages because she did not request them in her complaint. Plaintiff
responds that her complaint included a provision requesting other compensation, which can be
read to include unused vacation and two weeks notice. Plaintiff did not seek to submit this claim
to the jury, however.
Defendant points out that plaintiff states in her complaint that "after resigning, Pivotal
paid Ms. Fudali her final paycheck and reimbursed her for unused vacation." Complaint [#2] at
11 28; Amended Complaint [#24-21 at 11 28. Later in the Amended Joint Pretrial Statement [#95]
plaintiff sought damages for unpaid vacation and two weeks notice. l_d_. at 7-8. Thus defendant’s
assertion that plaintiff waited until her Statement of Damages Calculation to claim these
damages is inaccurate. in her Reply, plaintiff claims that the issue of unpaid vacation and salary
was discussed at trial, but she does not cite to any trial testimony or exhibits that indicate she is
entitled to these amounts. Reply at l3. Instcad, she points to testimony that she gave in a pre-
trial deposition where she testified that she did not receive these amounts. i;d. Plaintiff also
claims she provided documentation to the defendant, but she did not present those items as
evidence at trial. Li_. I appreciate that plaintiff may have presented her case for these items to
the defendant in the course of discovery, but she did not present it to the Court in the course of
the trial. lnstead, the record contains plaintiffs repeated admission that she has already been
compensated for unused vacation and salary. §g_., Complaint [#2] at 11 28; Amended Complaint
[#24-2] at 11 28. As plaintiff did not request that this issue be submitted to thejury, and the
evidence in the record does not support a finding that she was not paid for her unused vacation
and salary, 1 find, pursuant to Rule 49(a), that plaintiff is not entitled to recover those amounts.
B. Attorney’s Fees
The plaintiff asks the Court to invoke its "equity jurisdiction" to award her attorney’s
fees and costs as a consequential damage. Reply at 8. She argues that such an award is
appropriate in light ofthe "willfull[] deni[al]" by the defendant of her rightful commission. i;d.
(alleging "vexatious conduct" and "bad faith . . . for oppressive reasons"). Defendant, noting
that there is no contractual provision or statutory authority for such an award, opposes. Opp. at
l3.
"Under the American Rule, ‘the prevailing litigant is ordinarily not entitled to collect a
reasonable attorneys’ fee from the loser."’ Travelers Cas. and Sur. Co. ofAm. v. Pac. Gas and
Elec. Co., 127 S. Ct. 1199, 1203 (2007) (quoting Alveska Pipeline Serv. Co. v. Wilderness
§)c@y, 421 U.S. 240, 247 (1975)); see also Roos v. LaPrade, 444 A.2d 950, 951 (D.C. 1982)
("in the absence of statutory or rule authority, attorney’s fees generally are not allowed as an
element of damages, costs, or otherwise.") The Court may, however, award attorney’s fees to
the prevailing party "ifthe conduct ofthe nonprevailing party is willfully fraudulent, in bad
faith, vexatious, wanton, or oppressive." Ld.
The facts ofthis case do not support a diversion from the American Rule, Thejury made
no finding of bad faith or fraud on the part of the defendant, and the contracts at issue here
warranted careful consideration so that the defendant’s interpretation of them, even if incorrect,
cannot be said to have been made in bad faith. The plaintiff also points to the testimony ofJim
Warden, who testified that plaintiff"was spoken of crudely in senior management meetings."
Reply at 8. Even if true, however, that testimony cannot alone support fee-shifting here,
especially in the absence of any evidence directly linking that behavior to the defendant’s actions
in connection with the commission payments. The finaljudgment will therefore not include
attorney’s fees or costs.
C. Pre-Judgment Interest
The plaintiff asks the Court to award her pre-judgment interest, compounded on a
monthly basis, from l\/lay 30, 2002, the date ofthe defendant’s commission calculation
worksheet. Memo at 3-4. The defendant argues that interest should not be awarded for what it
believes are delays caused solely by the plaintiff, and that any award of interest should not be
compounded.
The parties focus their briefing on the question of how much pre-judgment interest should
be awarded. The threshold question, however, is whether pre-judgment interest can be awarded.
The plaintiff incorrectly cites D.C. Code § 15-1083 as controlling the award of pre-judgment
interest in this case. That statute states:
in an action in the United States District Court for the
District of Columbia or the Superior Court ofthe District of
Columbia to recover a liquidated debt on which interest is
payable by contract or by law or usage the judgment for the
plaintiff shall include interest on the principal debt from the
time when it was due and payable, at the rate fixed by the
contract, if any, until paid.
D.C. Code § 15-108. if applicable, § 15-108 would defeat the defendant’s attempts to carve out
portions oftime because pre-judgment interest is mandatory and is calculated "from the time
when [the commission] was due and payable." i_d. But § 15-108 applies only to "liquidated
debt." i;d. "A debt is liquidated ifat the time it arose, it was an easily ascertainable sum
certain." Hartford Accident & indem. Co. v. District ofColumbia, 441 A.2d 969, 974
3 All references to the D.C. Code refer to the most recent version available on Westlaw or Lexis.
10
(D.C.1982) (internal quotation omitted). The debt here, at the time it arose, could hardly be
described as "easily ascertainable." i_d. The best evidence ofthis is plaintiffs own inability to
ascertain what she was owed. in her first and amended complaints, for example, she only seeks
commission on first-year maintenance from the Syngenta deal. S@,§g;, Complaint [#2] at 11 29;
Second Amended Complaint [#24-21 at 11 29. it would take over three years for her to assert that
she was owed maintenance on the entire life of the Syngenta deal. § Amended Joint Pretrial
Statement [#91] at 8; Testimony of Marjorie Fudali, Oct. 22, 2007 ("i initially thought that it was
only first year’s maintenance"). The amount owed to the plaintiff was therefore an unliquidated
debt. See, e.g., Dist. ofColumbia v. Campbell, 580 A.2d 1295, 1300-01 (D.C. 1990) (noting that
the fluctuation in damages claimed by plaintiff during the course ofthe litigation "itselflikely
would be sufficient grounds for us to conclude that the damages . . . were unliquidated");
Hartford, 441 A.2d at 974 ("[W]e note that the amounts claimed by [the plaintiff] for the unpaid
balance of the contract . . . fluctuated throughout the litigation and were thus not liquidated.").
_f. Reiman & Co. v. Eromanga invs.. N.V.. 622 F. Supp. 13, 20-21 (D.D.C. 1985) (applying §
15-109, rather than § 15-108, to commission payments).
Because the debt here is unliquidated, the plaintiffs request for pre-judgment interest is
governed by § 15-109, which states in relevant part:
in an action to recover damages for breach of contract the
judgment shall allow interest on the amount for which it is
rendered from the date of the judgment only. This section
does not preclude the jury, or the court, if the trial be by the
court, from including interest as an element in the damages
awarded, if necessary to fully compensate the plaintiff.
D.C. Code § 15-109. Pre-judgment interest is therefore precluded unless "necessary to fully
compensate the plaintiff." i_d. That determination, however, is explicitly left to the finder of
fact, z'.e. "thejury, or the court, ifthe trial be by the court." Li_.; see also Dist. Cablevision LP v.
il
Biin, 828 A.2d 714, 731 n.24 (D.C. 2003) (statute "authorizes the trier of fact to include
interest as an element of damages" if necessary to fully compensate the plaintiff); mg
lien 270 A.2d 350, 351 (D.C. 1970) (statute "allows the fact-finder a wide measure of
discretion whether to include" interest). C_f. Bragdon v. Twentv-Five Twelve Assocs. Ltd.
B;s_l_ijp, 856 A.2d 1165, 1173 n.l0 (D.C. 2004) (declining to "address [whether] trial court erred
in ruling that any claim for prejudgment interest under D.C. Code § 15-109 had to be presented
to and awarded by the trier of fact, in this case, the jury.").
in the present case, the plaintiff did not request in her proposed verdict form that the jury
make that determination, Verdict Form [#99], and no objection was raised by her to the final
verdict form’s silence as to pre-judgment interest. Verdict Form [#102]; Transcript, Oct. 24,
2007. Nor did she raise an objection to thejury instructions, which were similarly silent in
regard to pre-judgment interest Jury instructions [#104]. § ali Fed. R. Civ. P. 5l(d) (party
cannot assign as error a failure to give an instruction unless that instruction was requested by the
party).
Consequently, the jury did not "includ[e] interest as an element in the damages awarded
[in order] to fully compensate the plaintiff," D.C. Code § 15-109, and it will not be awarded
now. E, §;g;, Schwartz, 723 A.2d at 844 (affirming trial court’s denial of plaintiffs post-trial
motion to add pre-judgment interest where motion was denied because the underlying contract
"did not provide for prejudgment interest and the issue was not presented to thejury during
trial"); Emersons, Ltd. v. Max Wolman Co.. 388 F. Supp. 729 (D.D.C. 1975), f 530 F.2d
1093 (D.C. Cir. l976) ("Clearly, the issue [of pre-judgment interest] was not argued at trial, nor
was any evidence submitted on the question. it is therefore inappropriate at this point in time for
the Plaintiffs to seek interest in some heretofore unspecified sum. in fairness, the Court will not
12
allow such interest to be levied . . . except from the date ofjudgment herein."`).
it could be argued that Rule 49(a) of the Federal Rules of Civil Procedure, which permits
a court to "make a finding" on an issue of fact that was not submitted to the jury, grants this
Court the authority to award pre-judgment interest. Fed. R. Civ. P. 49(a)(3). However, the plain
language of§ 15-109 says that the issue of pre-judgment interest is for the jury ifthere is one,
and here there plainly was one. See, e.g., Schwartz v. Swartz, 723 A.2d 841, 844 (D.C. 1998)
("Thus, [plaintiff] could have introduced at trial, for the jury’s consideration, evidence to show
that prejudgment interest was necessary to fully compensate him. He did not. instead, he
presented the issue to the trial judge in a post-trial motion."). Further, even if§ 15-109 did not
expressly remove the Court`s authority to make a finding in thejury’s absence, this issue is
distinguishable from those discussed previously under Rule 49(a). Specifically, Rule 49(a) only
allows the Court to make a finding when certain conditions are metz (l) the issue must be one of
fact; (2) must have been "raised by the pleadings or evidence"; and (3) not submitted to the jury.
The fact issue presented is whether plaintiff can be fully compensated without pre-judgment
interest. g § 15-109. Though the fact that plaintiff would request pre-judgment interest was
mentioned in a pre-trial statement [#95], neither she nor defendant presented any evidence before
or during the trial having to do with whether plaintiff required interest to be fully compensated.
Thus, the issue cannot even be fairly categorized as "raised by the pleadings or evidence." §15-
109.
For these reasons, pre-judgment interest will not be awarded. §g§,ig;, Bucheit v.
Palestine Liberation Org., 388 F.3d 346, 352 (D.C. Cir. 2004) (trialjudge’s denial of pre-
judgment interest was not an abuse of discretion where the plaintiff "had offered no evidence to
prove that prejudgment interest was necessary to compensate him fully . . . [and] over two days
13
oftrial [had] not only failed to offer any evidence regarding the need for prejudgment interest, he
failed to mention the subject at all."); Fed. l\/lktg. Co. v. Va. impression Prods. Co.. inc., 823
A.2d 513, 532 (D.C. 2003) (affirming the denial of pre-judgment interest because the "court
reasonably could view an award without such interest as sufficient to compensate" the plaintiff).
IV. Conclusion
in accordance with the jury’s verdict, and for the reasons stated above, 1 find that plaintiff
is entitled to be compensated for unpaid commissions in the amount of$l,163,046.0l, and
unpaid bonuses in the amount of$10,000. Therefore, the clerk is directed to enter a judgment
for the plaintiff in the amount of$i,173,046.01.
Date: November l0, 2008 /S/
JOHN M. FACCIOLA
U.S. MAGISTRATE JUDGE
14