I think I’d like to be remembered as someone who beat the odds through just plain determination… that I persevered. Because I think that being somewhat of a pest to life, constantly plaguing and pursuing, will bring results. –Sylvester Stallone
The warm climate and urban environment in the twin cities of Dallas and Fort Worth lends itself to infestations of pests, including ants, termites, mosquitoes and rodents. Recognizing the opportunity this creates, Julien’s Pest Control d/b/a Evolve Pest Control (“Evolve”) handed sales representative Brad Liston a five-year contract beginning in January 2021 to market pest control services in the greater Dallas-Fort Worth area.
Liston generated $362,491 in revenue for Evolve through personal sales in just his first year and was quickly named a sales representative manager.
Under the terms of their agreement, Evolve was to pay Liston 60 percent commission on all qualifying personal sales, plus $100 per sale that he serviced during each pay period. As a manager, Liston was also to receive “overrides” of 55 percent on all active annual service contracts sold by reps working under him.
When Evolve failed to pay Liston the $217,494.60 in commissions owed just on his own qualifying sales, Liston decided to take Sly Stallone’s advice and become a pest to Evolve. He plagued and pursued Evolve by filing suit in federal court.
Liston made the strategic decision to move for summary judgment on only his strongest claim—for breach of contract. Generally, proving a breach of contract is a relatively uncomplicated matter, requiring the plaintiff to show only proof of the existence of a valid contract, a breach by the defendant and resulting damages. And when a contract is deemed unambiguous by the court, the analysis is usually quite straightforward.
Here, the federal judge sitting in Salt Lake City had little difficulty finding that Evolve failed to pay the agreed 60 percent commission on Liston’s qualifying personal sales. Before concluding this failure to pay was a breach of contract, however, the judge recognized the need for a deep dive into the contract language.
The parties disputed whether it was Liston or Evolve who terminated the contract, a key point for purposes of determining the commissions due. Liston qualified for significantly less upon termination if he was the party walking away. Per the parties’ contract: “If Sales Rep terminates the Agreement and does not work the dates required by the Agreement, Sales Rep will receive a maximum of their up front pay per each qualifying, active, paying sale and forfeits all overrides and bonuses.”
Based upon this language, the court decided it was unnecessary to determine which party actually terminated, and instead the issue involved whether Liston’s commissions qualify as “up front pay,” or if they are forfeited as an “override” or a “bonus.” Evolve would only be considered in breach if the commissions allegedly due are not forfeited as overrides.
The contract did not include a definition of “up front pay.” Fortunately, other language in the contract enabled the judge to recognize that “commissions” and “overrides” were treated differently than “up front pay.” A definition of an override agreement was provided: “a contract between a sales manager and a sales representative that provides that a commission be paid to the manager of sales.”
The “overrides” allowed reps like Liston who manage salespeople to receive “55 percent commission on all current active annual service contracts sold by salespeople who work under or for” him. The court ultimately concluded that these are the “overrides” forfeited if the sales rep terminates, not the 60 percent commission (or $217,494.60) that Liston sued to recover.
Evolve tried arguing that the $100 paid for each sale serviced during the pay period was the “up front pay,” not the 60 percent commission paid for qualifying personal sales. But the court found “no basis for this distinction” in that both types of commission are listed in the contract under a “commission” heading. This position by Evolve also proved “inconsistent with their argument that the court must use the plain meaning of ‘up front pay,’ which is paid or payable in advance, to decide what qualifies as ‘up front pay.’”
Because the amounts owed to Liston for both types of commissions depend on qualifying sales, they are determined after-the-fact and are not paid “in advance.”
With the breach safely established, the remaining consideration was the resulting damages. The parties agreed that Liston generated the $362,491 in revenue for Evolve on which no commissions were paid. Evolve tried to defend against the all-but-certain award by suggesting the damages “might be too high,” but failed to present any evidence showing they should get reduced.
Defending a lawsuit on the grounds that a plaintiff who went to the trouble of proving his case at trial could receive a significant award is roughly akin to complaining that a skilled fisherman in a lake recently stocked with trout just might reel one in. Ultimately, the judge granted summary judgment to Liston on his breach of contract claim and awarded him every penny of the $171,194.60 in damages that he sought. Liston enforcing his contract against the much larger and better funded Evolve, like Stallone in his own epitaph, showed himself as someone who “beat the odds,” and indeed “through sheer determination…persevered.”
Adam J. Glazer is a partner in the law firm of Schoenberg Finkel Beederman Bell & Glazer LLC, and serves as general counsel to ERA. He is also a regular contributor to The Representor, and participates in Expert Access, the program that offers telephone consultations to ERA members.
You may contact Adam Glazer at 312-648-2300 or by email at [email protected].
