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DeGood Dimensional Concepts, Inc. v. Wilder

Court of Appeals of Indiana

November 12, 2019

DeGood Dimensional Concepts, Inc., Appellant-Defendant, Cross-Appellee,
John D. Wilder, Appellee-Plaintiff, Cross-Appellant.

          Appeal from the Kosciusko Circuit Court The Honorable Michael W. Reed, Judge Trial Court Cause No. 43C01-1103-PL-27

          ATTORNEY FOR APPELLANT Robert Owen Vegeler Fort Wayne, Indiana

          ATTORNEY FOR APPELLEE Ronald E. Weldy Indianapolis, Indiana

          Altice, Judge.

         Case Summary

         [¶1] DeGood Dimensional Concepts, Inc. (DeGood), appeals the trial court's judgment in favor of its former employee, John D. Wilder, for unpaid sales commissions and attorney's fees. Wilder cross-appeals, claiming that the trial court erred in not awarding him amounts for unpaid wages, additional commissions, liquidated damages, attorney's fees, and pre-judgment interest and costs.

         [¶2] We affirm in part, reverse in part, and remand with instructions.

         Facts & Procedural History

         [¶3] DeGood is a corporation in North Webster that manufactures and sells small orthopedic medical devices. The corporation is operated by Scott DeGood and his wife, Mary. Wilder had worked in sales and marketing with various businesses over the years, including other medical device companies.

         [¶4] At some point, Wilder approached the DeGoods about working for them in the sales division. After some negotiation, Wilder drafted an employment agreement (First Agreement) in December 2008. This contract provided that Wilder would earn an annual base salary of $50, 000 to be paid on a bi-weekly basis with ten days of paid vacation the first year, fifteen days the second year, and twenty days every year thereafter.

         [¶5] Wilder would also be paid a two percent commission on sales of pre-existing product sales from $1 million to $2 million, along with a two percent commission on sales of new products up to $2 million. This payment schedule was attached to the First Agreement. Wilder was to work exclusively for DeGood from his residence at least forty hours per week, plus travel as required. The First Agreement further provided that Wilder would report to the plant in North Webster for a minimum of six hours every two to three weeks. Wilder was obligated to copy DeGood on emails, abide by the rules set forth in the employee handbook that Wilder received and acknowledged, report all sales activities and provide those records to DeGood, and maintain a call log. In the event of termination or resignation, a one-month notice was required and full compensation was to be paid during that period. Both parties signed the First Agreement, and Wilder was to commence employment on December 15, 2008. However, the parties subsequently agreed to a January 1, 2009 start date. The date was again mutually changed to January 15.

         [¶6] DeGood sustained a substantial decline in product sales during the last half of 2009. As a result, all of its employees' hours were reduced for a six-month period. Additionally, both parties agreed that Wilder's salary would be reduced by 25% from July 20, 2009, through March 12, 2010.

         [¶7] On August 1, 2010, the parties entered into a second employment agreement (Second Agreement) that provided for a $5000 increase in Wilder's salary. This contract was designed, among other things, to clarify some of the terms and rules that Wilder had not been following under the First Agreement. The Second Agreement also provided that termination/resignation notice was to be three months, and "all forms of compensation [were to be included] during this period." Appellant's Appendix Vol. II at 111-12.

         [¶8] The DeGoods conducted periodic performance reviews throughout Wilder's employment, including one on September 8, 2010, that culminated in an overall negative review of Wilder's work performance. All reviews had detailed Wilder's numerous violations of known and stated rules that were set forth in the employee handbook, including the prohibition against working for other companies, taking extended breaks, and working many less hours than what had been agreed upon. More specifically, Wilder had been incommunicative with the DeGoods for several months after commencing employment, and he did not meet with any customers from January 15, 2009, until April 2009. Wilder only made two trips to the plant during the first six months of 2009, failed to send sales reports, or copy DeGood on emails. Mary told Wilder at the September 8 meeting that he would be terminated in three months if his performance did not improve. The DeGoods and Wilder acknowledged and signed each review.

         [¶9] On September 13, 2010, Wilder emailed Mary, stating, "I will assume that on 9/8/2010, I received my 90 day notice for termination. If this is the case, how would you like to proceed?" Exhibits Vol. IV at 1. Mary's email response that same day provided:

It was just as we presented it to you, as a Formal Warning (not termination) from your employer that your job is in jeopardy, why it is in jeopardy, and what our expectations as your employer are in moving forward to resolve any and all the problems discussed. We DID NOT give you a termination notice, and also stated that was NOT our intentions [sic] during the meeting as well. We did state that we wanted to work this out with you and hopefully have you working with the company for years to come.

Id. (Emphases in original). The response went on to state that

[b]ecause you have ignored numerous previous verbal warnings and e-mails, a written warning was presented to you that you now are on probation for 3 months, and will show us in those 3 months that you are willing to perform your job following the guidelines in the report that was given to you, and also discussed thoroughly during the meeting.

Id. at 6. The following day, Wilder emailed Mary again, stating, "No Termination notice regarding our agreement dated 2010. Your intention is not to terminate our agreement. Purpose for your summary & our discussions ("Employee Performance Review") was to clarify areas of improvement & to make sure employer expectations were clear." Id. at 6.

         [¶10] On December 6, 2010, Wilder emailed Mary explaining that he would be out for a half day because his back was "giving [him] trouble." Id. at 135. Later that afternoon, Mary responded as follows: "The amount of work that you have missed in the last couple of weeks on top of all the previous problems that have been addressed regarding your absenteeism is completely out of control and I must present a final warning that it [sic] not going to be continued to be [sic] tolerated!" Id. (Emphasis added).

         [¶11] Another Performance Notification (Notification), bearing a handwritten notation that Wilder's employment with DeGood was being terminated, was issued to Wilder on January 5, 2011. The Notification detailed numerous policy violations that Wilder had committed throughout the course of his employment. Three prior formal written warnings were documented in the Notification, which stated that "[t]he employee has 'Willfully Neglected' the position of the Sales VP and terms stated in his employment contract, along with the disregard of previously stated warnings and the below performance notifications that the employee already has received to date." Appellant's Appendix Vol. II at 133. The Notification stated that Wilder had continued to bring in company reps not associated with DeGood after he was told to cease such behavior. DeGood also asserted that Wilder had misused the company telephone and used the business's ATM card for unauthorized personal situations.

         [¶12] DeGood observed in the Notification that "John Wilder was formally put on a 3 month PROBATION and was given notification in writing regarding the probation with all issues outlined on 9/8/10 which the employee acknowledged and signed and was given copies." Id. DeGood also made it clear in the Notification that

[Wilder] was notified with a detailed summary, that he was in bre[ach] of his employment contract and that the employee owed the company monies from being overpaid for hours that the employee had not worked and that the amount owed to company would be zeroed out and any new compensation for commissions would start over at the end of the 3 month probation with the understanding the employee needed to make a serious dedicated effort in resolving all the problems that were noted.
The needed effort needed by the employee was not achieved during this 3 month Probation. . . .

Id. (Emphasis added).

         [¶13] Wilder filed a complaint against DeGood on March 14, 2011, for unpaid salary, commissions, vacation and sick time, and bonuses. DeGood counterclaimed for damages and injunctive relief. DeGood claimed, inter alia, that it had acted in good faith in not paying Wilder a portion of the commissions, and that it could not be held liable for unpaid wages, attorney's fees, court costs, or liquidated damages. DeGood also alleged that Wilder had committed civil theft because he ...

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