Cave Hill Corp. v. Hiers

PRESENT: Carrico, C.J., Lacy, Hassell, Keenan, Kinser, and
Lemons, JJ., and Compton, S.J.

CAVE HILL CORPORATION

v. Record No. 020060

PHILLIP T. HIERS OPINION BY
SENIOR JUSTICE A. CHRISTIAN COMPTON
PHILLIP T. HIERS November 1, 2002

v. Record No. 020070

CAVE HILL CORPORATION

FROM THE CIRCUIT COURT OF ROCKINGHAM COUNTY
John J. McGrath, Jr., Judge

These two appeals arise from a single action for damages

alleging breach of an employment contract. The central question

is whether the trial court erred in refusing to rule that the

contract was clear and unambiguous, and in submitting to a jury

the interpretation of the agreement.

To set the stage, relevant facts, mostly undisputed, that

furnish the background and details of this controversy must be

reviewed. In 1993, plaintiff Phillip T. "Chuck" Hiers commenced

work as a sales person for defendant Cave Hill Corporation in

its division, Atlantic Fabritech, located in Rockingham County.

The defendant manufactures above ground storage tanks, primarily

for use in the oil and lubrication industry.
 On September 9, 1998, the plaintiff and defendant, through

its president and sole shareholder, Walter M. Hopkins, executed

the one-page contract that is the subject of this dispute. The

agreement was "composed" by plaintiff and Hopkins, and was

typewritten on a page of Atlantic Fabritech stationery.

The contract is labeled:

"EMPLOYMENT AGREEMENT

EMPLOYEE: PHILLIP T. 'CHUCK' HIERS

TITLE: SALES MANAGER

EFFECTIVE DATES: August 14, 1998 – August 1, 2003"

In a preamble, the writing stated: "This work agreement

established on August 14, 1998 between Cave Hill Corporation,

d/b/a Atlantic Fabritech and Phillip T. Hiers is based on the

following conditions."

Paragraph 1 provided for a $25,000 annual salary plus a

cost-of-living increase.

Paragraph 2 provided, in part, for a two per cent

commission to be paid plaintiff "on Atlantic Fabritech tank

sales quoted, processed, generated and sold by Chuck."

Paragraphs 3 and 4 provided for use of a company vehicle

and for an expense allowance.

Paragraph 5 provided: "Thirty (30) days' notice will be

given by both the employee and the employer in the case of leave

or dismissal."

2
 Paragraphs 6 and 7 provided for a vacation period, and for

medical and dental insurance.

The agreement concluded with an unnumbered paragraph

delineating plaintiff's job responsibilities.

During the negotiations for the contract, Hopkins told the

plaintiff that one Stacey Sinnett, a former Cave Hill employee,

would be reemployed. The plaintiff understood that Sinnett was

to work for him in sales and in product development. However,

the plaintiff learned the day after the contract was signed that

Sinnett was to be the general manager of Atlantic Fabritech and

that the plaintiff would have "to report to" Sinnett.

Thereafter, disagreement between plaintiff and Hopkins

developed over job duties, commissions on sales, and plaintiff's

overall performance of his assigned work. Specifically,

plaintiff contended that, under the employment agreement, he was

entitled to commissions on all sales, that is, not only on sales

that he made but also on sales that Sinnett made. Hopkins took

the position that the plaintiff was not entitled to a commission

on Sinnett's sales.

During the period from September 1998 to May 6, 1999, the

disagreement continued, with Sinnett issuing "warnings" to

plaintiff about the performance of his duties. Finally, Sinnett

recommended to Hopkins that plaintiff's employment be terminated

because of "the way he handled several volume accounts . . . not

3
making as many sales calls . . . as he should, not travelling as

much as we needed . . . [and] not having his office organized."

Hopkins had observed that plaintiff "repeatedly" was late for

work and that he was "working on other projects," including

"selling guns and cars . . . during company business time."

Additionally, according to Hopkins, plaintiff was unable "to get

along with" Sinnett, would not conform to new policies

established by Sinnett, and "fell out with some of the

customers."

Eventually, plaintiff was discharged. In a May 6 letter to

the plaintiff, Sinnett wrote: "We find it necessary to

terminate your employment with Cave Hill Corporation as the

Sales Manager for the Atlantic Fabritech Division effective this

date. You will receive your salary for the month of May, which

we will give you today."

Subsequently, plaintiff filed the present action seeking

damages for breach of the employment contract. In a motion for

judgment, plaintiff asserted that he improperly "was denied

payment of commissions based on sales negotiated and approved by

Sinnett;" that he was criticized "with unjustified and untrue

accusations of inadequate job performance;" that he had been

guaranteed "a fixed term of employment to run from August 14,

1998 to August 1, 2003;" and that he had been "terminated

without just cause."

4
 In a grounds of defense, defendant denied plaintiff had

been employed for a fixed term. Defendant also filed a

counterclaim seeking damages from plaintiff for breach of

another agreement between the parties; the plaintiff had

promised not to disclose certain confidential and proprietary

information and not to compete with defendant upon termination.

During an August 2001 jury trial, the trial court permitted

the plaintiff to testify extensively, over defendant's

objection, to his "understanding" of many of the terms of the

employment contract. For example, plaintiff said his

"understanding" was that he "would be paid 2% commission on

. . . all tank sales" not "just 2% of what [he] personally sold

to a customer." Also, plaintiff testified about "the intent of

the parties" as set forth in the final paragraph of the

agreement relating to job responsibilities.

The trial court, over defendant's objection, permitted the

jury to interpret the contract, ruling that the agreement was

unclear and ambiguous. The court instructed the jury that it

"must determine whether the contract is for a definite term of

employment or whether it is a contract for employment that is

terminable at will." The court also told the jury that just

cause was required for an employer to terminate a fixed-term

employment contract prior to the end of the term.

5
 The jury found in favor of the plaintiff on his claim,

fixing the damages at $260,000, and denied the counterclaim.

Subsequently, in an October 2001 judgment order ruling on

defendant's motion to set the verdict aside, the trial court

ordered remittitur to $100,000, and otherwise entered judgment

on the verdict in favor of the plaintiff.

We awarded the defendant an appeal of the court's judgment

for the plaintiff. We also awarded the plaintiff an appeal of

the court's action in ordering remittitur.

Although the parties dwell upon the admissibility of parol

evidence with regard to those portions of the contract dealing

with commissions and job responsibilities, the core of these

appeals is the question whether the trial court erred in

refusing to rule, as urged by defendant, that the contract was

clear and unambiguous in establishing an employment that was

terminable at will. Stated differently, the crux of the

controversy upon review is whether the trial court erred in

determining that a jury issue was created regarding the nature

of the contract.

Settled principles are applicable here. "In Virginia, an

employment relationship is presumed to be at-will, which means

that the employment term extends for an indefinite period and

may be terminated by the employer or employee for any reason

upon reasonable notice." County of Giles v. Wines, 262 Va. 68,

6
72, 546 S.E.2d 721, 723 (2001). However, when the employment is

for a definite period, the presumption of at-will employment is

rebutted and an employee may be terminated only for just cause.

Progress Printing Co. v. Nichols, 244 Va. 337, 340, 421 S.E.2d

428, 429 (1992). And, when there is a conflict in the evidence

concerning the terms of an employment contract, the question

whether the employment is at will or for a definite term becomes

one of fact to be resolved by the jury. Miller v. SEVAMP, Inc.,

234 Va. 462, 465-66, 362 S.E.2d 915, 917 (1987).

In the present case, the trial court submitted the

interpretation of the contract to the jury because the court

ruled that its terms were ambiguous. "An ambiguity exists when

language admits of being understood in more than one way or

refers to two or more things at the same time." Renner

Plumbing, Heating & Air Conditioning, Inc. v. Renner, 225 Va.

508, 515, 303 S.E.2d 894, 898 (1983). However, "[c]ontracts are

not rendered ambiguous merely because the parties or their

attorneys disagree upon the meaning of the language employed to

express the agreement." Doswell Ltd. P'ship v. Virginia Elec.

and Power Co., 251 Va. 215, 222-23, 468 S.E.2d 84, 88 (1996).

And, "[e]ven though an agreement may have been drawn unartfully,

the court must construe the language as written if its parts can

be read together without conflict." Id. at 223, 468 S.E.2d at

88.

7
 On appeal, the plaintiff contends the trial court did not

err in permitting the jury to interpret the agreement. He

argues there was a conflict over the contract's terms and their

meaning. In particular, he maintains he "presented evidence and

argument that the Contract was for a definite term of five years

('Effective Dates: August 14, 1998 – August 1, 2003' . . .) and

that, therefore, the Contract was terminable only upon just

cause and with termination effective only following thirty days

notice." We do not agree.

We hold that the contract was clear and unambiguous. In

plain terms, the contract was effective for a designated period

of time. Nevertheless, the agreement specifically was subject

to certain "conditions," as mentioned in the preamble. The

significant condition relevant here is that either party could

terminate the contract upon 30 days notice, according to the

clear terms of paragraph 5. This notice provision trumped the

effect of the designated time period.

Nowhere in this writing is there any reference to a "just

cause" requirement for job termination by the employer. In

order to find such a requirement, one would have to insert words

into the writing contrary to the elementary rule that the

function of the court is to construe the contract made by the

parties, not to make a contract for them. See Wilson v.

Holyfield, 227 Va. 184, 187, 313 S.E.2d 396, 398 (1984).

8
 Consequently, we hold that the trial court committed

reversible error in refusing to decide as a matter of law that

the contract was one terminable at will and in permitting the

jury to interpret the agreement. Because plaintiff was an at-

will employee, the defendant properly terminated him upon giving

30 days notice, and the defendant's conduct in this regard is

not actionable.

In view of the foregoing ruling, the parol evidence

question becomes a subsidiary issue. It necessarily follows

from what we already have said that the trial court also erred

in admitting extrinsic evidence of the plaintiff's

"understanding" to explain the terms of the agreement relating

to commissions. "Parol evidence of prior or contemporaneous

oral negotiations are generally inadmissible to alter,

contradict, or explain the terms of a written instrument

provided the document is complete, unambiguous, and

unconditional." Doswell Ltd. P'ship, 251 Va. at 222, 468 S.E.2d

at 88 (quoting Renner, 225 Va. at 515, 303 S.E.2d at 898).

We address the parol evidence issue only because the

plaintiff did have an employment contract, albeit one that was

terminable at will. Thus, he had a potential claim for failure

of defendant to pay commissions due under the contract.

However, we hold that paragraph 2 plainly provides for

commissions on "tank sales quoted, processed, generated and sold

9
by Chuck," and not upon such sales sold by Sinnett. Therefore,

plaintiff, as a matter of law, was not entitled to recover any

sum for commissions on Sinnett's sales.

Consequently, the judgment in favor of the plaintiff will

be reversed and final judgment will be entered here in favor of

Cave Hill Corporation. This ruling renders the other appeal

moot, and it will be dismissed.

Record No. 020060 – Reversed and final judgment.
Record No. 020070 – Dismissed.

10