may not be cited except as provided by
Minn. Stat.§ 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Investors Bank Corp.,
a Delaware corporation, et al.,
Filed May 20, 1997
Hennepin County District Court
File No. 956146
Robert J. Hennessey, Wallace G. Hilke, Lindquist & Vennum, P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402-2205 (for Respondents)
Considered and decided by Davies, Presiding Judge, Norton, Judge, and Kalitowski, Judge.
Appellant Steven Sherwood challenges the district court's grant of summary judgment in favor of respondent Investors Bank Corporation claiming the district court erred in determining that his employment contract with Investors unambiguously: (1) did not entitle him to commissions on pipeline loans; (2) entitled him to receive only the highest basis point schedule of any loan officer; and (3) did not entitle him to an additional compensation payment of $11,111.40. We affirm.
Whether a contract term is ambiguous is a legal question for the court. In re Hennepin County 1986 Recycling Bond Litigation, 540 N.W.2d 494, 498 (Minn. 1995). Generally, a court does not consider extrinsic evidence when determining whether a contract is ambiguous. Id. However, if the language of a contract is reasonably susceptible to more than one interpretation, the contract is ambiguous and a court may resort to extrinsic evidence to construe the contract. Blattner v. Forster, 322 N.W.2d 319, 321 (Minn. 1982).
"Absent ambiguity, the construction of a contract is a question of law." Krogness v. Best Buy Co., 524 N.W.2d 282, 285 (Minn. App. 1994) (citation omitted). When interpreting a contract, "the language found in a contract is to be given its plain and ordinary meaning." Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979) (citation omitted).
With regard to commissions on pipeline loans, Sherwood's employment contract states:
Voluntary Termination. In the event that you voluntarily terminate your employment, the Bank will pay you your earned commissions and overage on any loan closed up to and including the effective date of termination. Termination will take place immediately after you inform the Bank of your intent to terminate or at a later date at the Branch Manager's discretion. No commissions, benefits, awards, etc. will be paid for loans which close after the effective date of termination. * * *
Involuntary Termination. In the event that your employment is involuntarily terminated by the Bank, commissions will be paid on all loans closed up to and including the date of termination, and thereafter, no other commissions or overages will be due or payable. There shall be no exceptions. Final pay will be calculated as a proration of the non-cumulative draw or draw minus deficit based on last day of employment. A reasonable time frame will be observed to review status of your current pipeline along with any losses that may be incurred as a result of collection of insufficient funds as referenced in Section 4.7.
The plain language of Sherwood's contract indicates he is not entitled to commissions on pipeline loans. The fact that Sherwood was responsible for uncollected fees is neither inconsistent with this language nor does it make the language ambiguous.
Sherwood also contends Minn. Stat. § 181.13 (1996), makes his contract ambiguous. Minn. Stat. § 181.13 states:
When any person, firm, company, association, or corporation employing labor within this state discharges a servant or employee, the wages or commissions actually earned and unpaid at the time of the discharge shall become immediately due and payable upon demand of the employee.
Sherwood claims the "actually earned and unpaid" language of the statute requires a factual determination of "whether a commission has been earned at the time of discharge." Without support, Sherwood contends, "[t]he standard for determining whether a commission has been earned is different under Minn. Stat. § 181.13 than under the Loan Officer Compensation Plan."
The district court determined that there was no conflict between the statute and Sherwood's employment contract because the statute requires commissions that were earned to be paid and the contract determines when a commission was earned. We agree. In Holman v. CPT Corp., 457 N.W.2d 740 (Minn. App. 1990), this court stated:
Since the term "actually earned" is not defined by statute, the terms of [the employer's] own compensation plan may be considered in determining whether [the employee] had earned the Mayo commissions.
Id. at 743. Accordingly, the district court did not err in granting summary judgment against Sherwood on this claim.
The Bank agrees that it will not grant any of its loan officers incentive compensation greater than the incentive compensation granted to Sherwood under this Addendum during the time period from January 1, 1994, through December 31, 1998, as long as Sherwood is the Bank's highest producing loan officer in each calendar year.
In the Addendum, under the bolded and underlined title "Incentive Compensation," Sherwood's basis point schedule was laid out.
Sherwood claims this contract provision is ambiguous. He argues that because he interprets it to apply to all aspects of his compensation and Investors argues it applies only to the basis point schedule, the contract is susceptible to more than one interpretation. Sherwood's interpretation, however, must be reasonable. See City of Virginia v. Northland Office Properties Ltd. Partnership, 465 N.W.2d 424, 427 (Minn. App. 1991) (a contract is ambiguous if it is reasonably susceptible to more than one interpretation). In City of Virginia, this court affirmed a district court's grant of summary judgment on a contract dispute, stating:
The interpretation of the development agreement offered by appellants is unreasonable; it is inadequate to create ambiguity so as to make the interpretation of the agreement a factual question, thereby rendering summary judgment inappropriate.
Because Sherwood's interpretation contradicts the plain language of the contract, it is unreasonable. While the employment contract does not explicitly define "incentive compensation" under the title "incentive compensation," the contract provides Sherwood's basis point commission schedule. Sherwood's interpretation ignores the contract language that states he will receive the highest incentive compensation under this Addendum. As such, we reject Sherwood's argument concerning the automobile allowance, salary, and overage compensation of other loan officers.
Even if the contract assurance is limited to incentive compensation, Sherwood argues, Investors has violated the provision. To support his claim, Sherwood combines the basis point commission schedule of two different loan officers and cites the basis point commission schedule of a loan officer for 1995, a year when he was not the highest producing loan officer.
Once again, Sherwood's interpretation is unreasonable. It is undisputed Sherwood received incentive compensation equal to or greater than any other single loan officer. Only by combining the incentive compensation of two different loan officers can Sherwood support his claim. Nothing in the language of his contract supports such an interpretation.
Sherwood also cites the incentive compensation of a loan officer for 1995 to support his claim. The 1995 commission schedule of any loan officer does not entitle Sherwood to a higher 1994 commission schedule. Sherwood presented no evidence that any other loan officer had a higher 1994 schedule than he did.
Accordingly, the district court did not err in determining Sherwood failed to establish that any other loan officer received greater incentive compensation than he did.
Further, the Bank agrees to pay Sherwood the sum of $55,557.00 payable in five (5) equal annual installments of $11,111.40 on January 31 of each year commencing January 31, 1994. In the event Sherwood's employment with the Bank is terminated for any reason during that five year period, the Bank shall have no obligation to pay Sherwood any remaining unpaid installments.
Despite being terminated before the installment became due, Sherwood claims he is entitled to the January 31, 1995, payment of $11,111.40. According to Sherwood, he "earned the bonus prior to the time of his termination."
The district court found no support for Sherwood's position in the language of the contract. According to the court, "[t]he language of the contract did not require Investors to pay Sherwood the bonus after he was terminated on January 4, 1995." We agree. Because Sherwood was terminated before the payment became due and Investors was not responsible for any unpaid installments, Sherwood was not entitled to the additional compensation payment. Accordingly, the district court did not err in granting summary judgment in favor of Investors on this claim.