May 8, 2009
JEFFREY W. NORTON, PLAINTIFF-RESPONDENT,
ATLANTIC CHRYSLER PLYMOUTH, INC., DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, L-981-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 3, 2009
Before Judges Winkelstein, Gilroy and Chambers.
Defendant Chrysler Plymouth*fn1 appeals from the judgment in the amount of $4,357.21 entered against it and in favor of its former employee, plaintiff Jeffrey W. Norton. The judgment compensates plaintiff for commissions earned during his last month of employment with defendant. Defendant contends that, because plaintiff did not complete his last month of employment, he is not entitled to any commissions for that month under the Pay Plan governing plaintiff's employment. We affirm, concluding that the trial judge's findings and conclusions are supported by the record.
Plaintiff, working as defendant's service manager, was terminated from this position on September 20, 2007. He filed a wage collection claim, pursuant to N.J.S.A. 34:11-57 to -67, with the New Jersey Department of Labor and Workforce Development, Division of Wage and Hour Compliance (the Department), contending that defendant owed him commissions for the month of September and certain adjustments in commissions for the months of June, July and August 2007. On November 19, 2007, the Department entered a default judgment against defendant in the sum of $5,822.81. As permitted by N.J.S.A. 34:11-63, defendant appealed to the Superior Court, which conducted a de novo review. See Marr v. ABM Carpet Service, Inc., 286 N.J. Super. 500, 504-05 (Law Div. 1995) (concluding that under N.J.S.A. 34:11-63, the judiciary must conduct a de novo review of appeals from the Department on wage disputes).
The trial proofs established that the parties signed a written document on June 19, 2006, entitled "Pay Plan" that provided in full:
Commission: 4.5% of Service Gross Profit Employee MUST work the full month to be entitled to the bonus for that month.
Plaintiff testified that when working for defendant, he received each month a 4.5 percent commission on the service gross profits earned in that month. He called this a "commission bonus." The amount was denoted on his earning statement as a "bonus." He maintained that he was entitled to the 4.5 percent commission for the days he worked in September 2007. He also testified that on occasion he received bonuses that were separate and apart from his 4.5 percent commissions. He argued that the phrase in the Pay Plan reading "[e]mployee MUST work the full month to be entitled to the bonus for that month" referred to these bonuses and not the 4.5 percent commission.
Joseph Costanza, defendant's General Manager and plaintiff's supervisor, testified at trial. He acknowledged that plaintiff's Pay Plan was already in place when he joined defendant. However, he testified that defendant used the terms commissions and bonus interchangeably and that the reference to commissions and bonus on the Pay Plan meant the same thing. As a result, defendant maintained that plaintiff was not entitled to any 4.5 percent commissions for the month of September.
The trial judge resolved this dispute in favor of plaintiff. He noted that the Pay Plan used two different words, "commission" and "bonus," and he assumed "that the person who prepared [the pay plan] had a reason for using two different words." The judge found that both witnesses were credible and acknowledged that "there is obviously some confusion on [the] parts of both parties as to what is 'commission' and what is 'bonus.'"
The trial judge awarded plaintiff commissions of 4.5 percent for the days plaintiff worked in September. The service gross profit figures for September 2007 were not introduced into evidence; plaintiff explained that since he was no longer in defendant's employ, he did not receive those figures. However, plaintiff's earnings statement set forth his year-to-date payments for the 4.5 percent commission on gross service profits. As a result, the judge calculated plaintiff's damages for the days he worked in September using those figures. The judge did not award plaintiff any additional commissions for the months of June, July and August, and plaintiff has not cross-appealed on that issue.
On appeal, defendant contends that the Pay Plan clearly and unambiguously provides that plaintiff must work the full month in order to receive his 4.5 percent commission, and that the court must enforce the contract as written. This argument rests on the language in the Pay Plan that provides: "Employees MUST work the full month to be entitled to the bonus for that month." Defendant contends that the reference to "bonus" in this sentence is synonyamous with the 4.5 percent commission referenced earlier in the Pay Plan. Defendant maintains that the trial judge wrote a better contract for plaintiff than the parties made. Defendant also argues that since the record contains no evidence of the service gross profits for the month of September, commissions could not be calculated for that month, and as a result, plaintiff has failed to prove his damages.
Interpretation and construction of a contract is a matter of law for the court subject to de novo review by the appellate court. Fastenberg v. Prudential Ins. Co. of Am., 309 N.J.
Super. 415, 420 (App. Div. 1998). When construing a contract, the terms of the contract must be given their "plain and ordinary meaning" and the writing must be interpreted as a whole. Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997) (quotation omitted). "[W]here the terms of a contract are clear and unambiguous there is no room for interpretation or construction and the courts must enforce those terms as written." Karl's Sales and Service, Inc. v. Gimbel Bros., Inc., 249 N.J. Super. 487, 493 (App. Div.), certif. denied, 127 N.J. 548 (1991). The court has no right "to rewrite the contract merely because one might conclude that it might well have been functionally desirable to draft it differently." Ibid. (quotation omitted). Nor may the court make a better contract for the parties than they have seen fit to make, or to alter it for the benefit of one party or the other. Ibid.
However, where the language in a contract is ambiguous, extrinsic evidence may be introduced to determine its meaning. Schor v. FMS Financial Corp., 357 N.J. Super. 185, 192 (App. Div. 2002). A contractual provision is considered ambiguous "if the terms of the contract are susceptible to at least two reasonable alternative interpretations." Id. at 191 (quotation omitted). Here, the last sentence in the Pay Plan is ambiguous. The Pay Plan does not define the term "bonus," and thus it is unclear from reading the Pay Plan whether bonus refers to the commissions mentioned earlier in the agreement or if it refers to some other benefit accorded the employee. As a result, extrinsic evidence may be considered to determine the meaning of the term.
Plaintiff testified that in addition to the 4.5 percent commissions, on occasion, he received bonuses and that the reference to "bonus" in the Pay Plan referred to these other benefits and not his 4.5 percent commissions. Costanzo stated that defendant used the terms "bonus" and "commissions" interchangeably. Defendant argues that the identification of the commissions as "bonus" on plaintiff's earnings statement supports this position.
We recognize that the trial judge did not expressly state which interpretation of the contract was correct. However, by awarding plaintiff damages, he implicitly rejected defendant's argument. The trial judge's findings will not be overturned provided they are "supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974), and we will defer to his findings on the credibility of witnesses. Cesare v. Cesare, 154 N.J. 394, 412 (1998).
The evidence supports a finding in favor of plaintiff. While the trial judge found both of the witnesses credible, the facts justify placing more weight on plaintiff's interpretation of the contractual language because he was present at its execution. While Costanzo had a contrary understanding of the contractual provision, Costanzo was hired by defendant after plaintiff's Pay Plan was executed, and thus he could not testify to the intention of the parties at that time. For this reason, Costanzo's interpretation of the contractual language could sensibly be given less weight than plaintiff's. Further, plaintiff's testimony that he received bonuses in addition to the 4.5 percent commissions buttresses his interpretation of the contract that the commissions and the bonuses were two different types of compensation. Defendant did not dispute that plaintiff received bonuses in addition to the 4.5 percent commissions.
We note that in explaining his decision, the trial judge stated: "what I do find is that there is obviously some confusion on [the] parts of both parties as to what is commission and what is bonus." In light of this statement, the trial judge's opinion could also be interpreted as a determination that there was no meeting of the minds on the last sentence of the Pay Plan. Plaintiff understood the sentence to apply to his other bonuses, and defendant intended it to apply to the commissions.
The rules governing interpretation of a contract "may result in a conclusion that there was in fact no agreement on a particular point." Restatement (Second) of Contracts § 204 comment c (1979); see Id. at § 201(3) (where the parties have attached different meanings to a term, subject to certain exceptions "neither party is bound by the meaning attached by the other even though the result may be a failure of mutual assent"); Id. at § 20(1)(a) (no contract is formed where the parties attached materially different meanings to the terms used and "neither knows or has reason to know the meaning attached by the other"). Accordingly, the evidence also supports a conclusion that the limitation on recovery of a "bonus" does not govern the 4.5 percent of gross service commissions, because the parties reached no agreement on that issue.
In situations where the parties to a contract have failed to reach agreement on an essential term, the court may impose a reasonable term that "comports with community standards of fairness and policy." Id. at § 204 comment d. As a result, if the parties did not reach an agreement on calculation of 4.5 percent commissions in the event plaintiff left defendant's employ in the middle of the month, the trial court solution of allowing a pro rata recovery of 4.5 percent commissions for the time that plaintiff worked during the month was reasonable.
Defendant also contends that the trial judge's calculation of damages was incorrect. The judge calculated plaintiff's 4.5 percent commissions for the portion of the month of September that he worked, based on the average amount of such commissions he had received from January to August 2007, as reflected in plaintiff's last earnings statement. Defendant contends that the gross service profits for September 2007 should have been used in the calculation. Since the gross service profit figures for September 2007 were not part of the record, defendant contends that plaintiff has failed to prove his damages.
We note at the outset that because plaintiff was terminated during the middle of the month, the usual calculation of his 4.5 percent commissions could not be made. An adjustment in the calculation was necessary in order to accommodate the fact that plaintiff left the position in the middle of the month. Defendant contends that in making the adjusted calculation, the trial judge should have used only the gross service sales figures for the month of September, and that since plaintiff had not proved that sum, he was not entitled to any damages even if he prevailed on his liability claim. The trial judge calculated plaintiff's 4.5 percent commissions for the days he worked in September using the year to date commission figures. We conclude that this is a reasonable methodology and that the judge fixed the damages with a reasonable degree of certainty. See Restatement (Second) of Contracts § 352 (1979) (stating that "[d]amages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty").
For all of these reasons, the judgment is affirmed.