Conaway v. Stark Truss Company, Inc.
Memorandum Opinion and Order granting Stark's motion for summary judgment (Doc. # 41 ). The complaint is dismissed. Judge John R. Adams on 9/27/13. (K,C)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
STARK TRUSS COMPANY, INC.
CASE NO. 5:11CV2295
JUDGE JOHN R. ADAMS
MEMORANDUM OF OPINION
(Resolving Doc. 41)
This matter is before the Court on Defendant Stark Truss Company Inc.’s (“Stark”)
motion for summary judgment.
For the reasons that follow, Stark’s motion (Doc. 41) is
The underlying facts relevant to the disposition of this matter are as follows. Plaintiff
Danny Conaway (“Conaway”) began employment with Stark as a salesman in 1999. Stark
primarily manufactures roof and floor trusses utilized in residential and commercial construction
projects. Stark’s headquarters are in Canton, Ohio with operations throughout the United States.
Conaway was solely responsible for Stark’s sales for its two Texas plants. Conaway’s at-will
employment ended in June of 2010.
In 2007, Conaway and Stark entered into a “Covenant of Employee” (“Covenant”) which
contained a confidentiality clause, a non-compete clause and non-solicitation provisions.
Conaway solicited counsel with regard to the compensation structure and presented Stark with an
amended structure. Stark accepted Conaway’s compensation language and it was included in the
final Covenant. The compensation provision reads as follows:
7. Compensation. During the term of Danny Conaway’s employment with Stark
Truss, Stark Truss shall pay to Danny Conaway:
(a) The amount of $200,000.00 per annum, payable monthly and a commission at
the rate of 25% of net profits of each of the Stark Truss plants located in the
Hearne, Texas and Sherman, Texas, less the $200,000.
(b) Stark Truss shall calculate the net profits per each of the two plants monthly
and shall credit twenty-five percent (25%) of the monthly net profits to Danny
Conaway’s account. In computing the net profits of each plant, expenses allocated
to corporate or other plants (corporate allocation) shall not exceed 5%
respectively of the Hearne and Sherman plant’s receipts. Stark Truss shall
compute each plant’s net profits and reconcile the account by January 31st of the
following year. Mr. Conaway may draw against the funds that have accumulated
to his account at any time.
It is undisputed that Danny Conaway received his $200,000 base salary for each year at
issue in the complaint. He disputes, however, the calculation of his commission for the years
2007 through 2009.
It is undisputed that commission calculations were done monthly.
According to Kathy Whitcomb, Stark’s payroll administrator,
In order to permit Danny Conaway to draw against commission, each month a
calculation of the net profits for the Hearne and Sherman, Texas plants was
undertaken. If there was a net profit, 25% was calculated and that amount was
‘banked’ to Mr. Conaway’s Commission ‘account.’ However, no actual funds
from the calculations were deposited to an account, nor were any funds
segregated. The calculation was figuratively referred to as an ‘account’ or
‘banked funds.’ From 2007 forward, I provided to Danny Conaway year-to-date
information on the ‘banked funds’ and a running Commission Reconciliation
Statement for each year. Also, an annual reconciliation was performed on the
Conaway contends that he earned this commission monthly, and therefore the overall
yearly profitability of the Texas plants did not affect his month-to-month commission earnings.
Stark contends that the anticipated commission was simply set aside to allow Conaway to make
draws and that his commission was not earned until the yearly reconciliation was completed in
January of each year.
In 2008, Conaway met with Don Groom, who was then Stark’s vice-president as well as
Conaway’s friend. According to Conaway and Groom, the economy had taken a turn for the
worse and Stark was having financial troubles. As such, Groom asked Conaway if Stark could
use $200,000 from Conaway’s banked funds. Conaway orally agreed. The parties agree that this
conversation occurred over a dinner in Costa Rica and that it was not reduced to writing. Later,
Conaway directed Groom to withhold $40,000 from his banked funds monthly from July to
October. The last $40,000 was to be adjusted in 2009. Conaway contends that this $200,000
was a loan to be repaid. Stark contends that the money was essentially a pay cut in a poor
economy by a high- level employee and that it was never characterized as a ‘loan.”
Finally, in 2009, it is undisputed that Stark was only profitable in the months of January,
March and April. Overall, the year was a poor one, with no net profit. Regardless, in line with
the agreement made in 2008, at Conaway’s instruction, $40,000 was deducted from Conaway’s
account in February of 2009. In May of 2009, Conaway took a draw against his account in the
amount of $75,000. Stark contends that because there were no net profits for the year of 2009,
Conaway was not entitled to any commission and therefore, filed its counter-claim for the return
of the $75,000 alleged overpayment. Conaway counters that he earned commission monthly,
and thus, he earned the $75,000 commission in the months of January, March and April.
Conaway filed his complaint asserting four separate causes of action against Stark: 1)
breach of contract for failing to pay Conaway certain commissions due under the Compensation
Agreement, 2) breach of the 2008 oral contract to repay him $200,000 loaned to Stark, 3) unjust
enrichment for unpaid commissions and/or the unpaid loan and 4) fraud. Stark’s counterclaim
asserted that Conaway was overpaid by $75,000. Stark filed its motion for summary judgment
and the matter is ripe before this Court.
Summary judgment is appropriate when the “pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any, show that there is no
genuine issue of material fact and that the moving party is entitled to judgment as a matter of
law.” Estate of Smithers v. City of Flint, 602 F.3d 758, 761 (6th Cir. 2010). A fact must be
essential to the outcome of a lawsuit to be ‘material.’ Anderson v. Liberty Lobby Inc., 477 U.S.
242, 248 (1986). Summary judgment must be entered when a party fails to make a “showing
sufficient to establish…an element essential to that party’s case.” Celotex Corp. v. Catrett, 477
U.S. 317, 322-23. “Mere conclusory and unsupported allegations, rooted in speculation, do not
meet [the] burden.” Bell v. Ohio State Univ., 351 F.3d 240, 253 (6th Cir. 2003).
Summary judgment creates a burden-shifting framework. See Anderson, 477 U.S. 250.
The moving party has the initial burden of showing there is no genuine issue of material fact.
Plant v. Morton Int’l, Inc., 212 F.3d 929, 934 (6th Cir. 2000). Specifically,
“A party asserting that a fact cannot be or is genuinely disputed must support the
(A) citing to particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations,
stipulations (including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials; or
(B) showing that the materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce admissible evidence to
support the fact.”
The burden then shifts to the nonmoving party to prove that there is an issue of material fact
that can be tried. Plant, 212 F.3d at 934. If this burden is not met, the moving party is then
entitled to a judgment as a matter of law. Bell, 351 F.3d at 253. In evaluating a motion for
summary judgment, the Court must construe the evidence and draw all reasonable inferences in
the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). The non-moving party may not simply rely on its pleadings;
rather it must “produce evidence that results in a conflict of material fact to be resolved by a
jury.” Cox v. Kentucky Dep’t of Transp., 53 F.3d 146, 150 (6th Cir.1996). A fact is “material”
only if its resolution will affect the outcome of the lawsuit. Anderson v. Liberty Lobby, Inc., 477
U.S. 242248 (1986).
Breach of Contract:
Initially, Stark contends that it is entitled to summary judgment on Conaway’s breach of
contract claim against it. To sustain a breach of contract claim, Conaway must demonstrate that
(1) a contract existed (2) he fulfilled his obligations pursuant to the contract, (3) Stark failed to
fulfill its contractual obligations, and (4) damages resulted from this failure. Second Calvary
Church of God in Christ v. Chomet, 2008 WL 834434, at *2 (Ohio Ct.App. Mar. 31, 2008); see,
also, Walker v. Rent-A-Center, No. 5:06CV1232, at *8 (N.D. Ohio Oct. 19, 2007).
The parties agree that the Compensation Agreement governs this argument. There is no
contention that Conaway did not perform his employment duties, and Stark admits that he was
paid compensation pursuant to the agreement. Conaway contends that Stark failed to fulfill its
obligation to pay his commission based upon his reading of the Compensation Agreement as
stated above. Conaway argues that his commission was earned monthly rather than annually.
Upon review, the Court concludes that this interpretation is not supported by the Compensation
Conaway points to subsection (b) to support his contention that his commission was
earned monthly. While a plain reading of this section provides that Stark was to calculate the net
profits monthly and credit 25% of those monthly net profits to Conaway’s “account,” it goes on
to say that these calculations shall then be computed and reconciled each year by January 31.
Further, the express language of this section allows Conaway to “draw against the funds that
have accumulated to his account at any time.” (Emphasis added.) A reading of the entire
subsection makes clear that the calculations are done monthly so that Conaway may draw
against the amount, but that the final amount actually earned is calculated yearly. To read this
subsection as Conaway asserts would render the requirement of a yearly reconciliation
unnecessary, in contravention of this Court’s obligation to give every term of an agreement
meaning. See Sherwin-Williams Co. v. Travelers Cas. & Sur. Co., 2003 WL 22671621, at *4
(Ohio Ct. App. Nov. 13, 2003).
Further, the language of this section specific allows Conaway to “draw against” the
funds. It does not provide that the money is earned at that time. At his deposition, Conaway
stated that in his previous employment he had never “had a draw against commission. A draw
against commission means you have to pay the money back if you don’t earn the commission; is
He then confirmed that he did not believe he had ever had a draw. Conaway
Depo., page 11. This is in direct conflict with the Compensation Agreement, stating clearly that
Conaway could draw against the funds in his commission account. This choice of language, as
proposed by Conaway and accepted by Stark, supports the Court’s conclusion that the
Compensation Agreement does not provide for monthly commissions earned, but rather monthly
commissions calculated. The amount earned was finalized in January of each year, after the
annual net profits of the plants could be determined.
During his deposition, Conaway explains the basis for his damage calculation in his
complaint. Specifically, he claims that Stark miscalculated his commission in 2007 and in 2009.
Conaway asserts that Stark owed him $187,196 from 2007. Conaway Depo. P. 38.
However, evidence presented at Conaway’s deposition makes clear that this payment was, in
fact, made. Specifically, Stark presented Conaway with emails between himself and Kathy
Whitcomb, Stark’s payroll administrator, from February 1-5. Conaway Dep. Ex. E & F. In the
emails, Whitcomb informed Conaway that “the reserve amount to be paid out is $187,198.00. I
just want to make sure we are on the same page before I enter into payroll.” Conaway responded
to this email, requesting that the amount be direct deposited to various accounts. Whitcomb
replied, explaining that the payroll had already been processed, and in order to split the amount
between various accounts, they would have to reverse the pay that had been processed and issue
live checks. Conaway replied, stating that it was fine to wait until the next pay period to directly
deposit the checks.
When questioned at his deposition about these emails, Conaway stated that he had no
evidence to believe that this amount was not deposited to the accounts as stated. Further, in his
response to Stark’s motion for summary judgment, Conaway explains that “This payment is not
reflected on Stark Truss’ Reconciliation Statements, which lead Conaway to believe it had not
been paid at the time he filed the lawsuit. Even in light of this payment, however, Stark Truss
failed to pay Conaway the proper amount of commission that he was entitled to over the course
of his employment.” Doc. 44, fn 8. As such, Conaway concedes that his damage calculation for
2007 was incorrect. He claimed no other damages from 2007.
Conaway’s asserted damages from 2009 again rely on his contention that the
Compensation Agreement contemplates earning a monthly commission. 1
admitted at his deposition that for the 2009 calendar year there were no net profits for the Texas
plants. Conaway Depo. P. 60. He claims, however, that he is owed commission for the three
months of that year that the plants did make a profit. He claims that he was owed $132,704.
Conaway Depo. P. 61. As explained above, Conaway’s interpretation of the Compensation
Agreement is incorrect. Instead, he was entitled to a portion of the profits from the annual net
profit of the Texas Plants. The parties agree that there was no annual net profit. Therefore,
Conaway was not entitled to any commission for 2009.
Unjust Enrichment and the Compensation Agreement
Conaway argues unjust enrichment in the alternative.
With regard to any damage
claimed from the Compensation Agreement, the Court has determined that an enforceable
contract governs these allegations. “A claim for unjust enrichment is an equitable claim, and is
based on a legal fiction where courts will imply a ‘contract’ as a matter of law. See Wuliger v.
Mfrs. Life Ins. Co., 567 F.3d 787, 799 (6th Cir. 2009) (‘Unjust enrichment is an equitable
doctrine to justify a quasi-contractual remedy that operates in the absence of an express contract
or a contract implied in fact to prevent a party from retaining money or benefits that in justice
Conaway makes several statements as to why his commission was miscalculated, but fails to set forth any amount
he claims owed, other than those set forth in his deposition. He asserts, for example, that Stark’s accounting is
incorrect because it shows negative amounts for some months. This argument again relies on the faulty assumption
that his commission was earned monthly. He contends that his Compensation Agreement only contemplated a
percentage of commission based upon the net profit of the plants and that he was not obligated to share in the Texas
Plants losses. When viewed as an annual earning, however, Conaway has failed to show that Stark ever required
him to share in its annual loses. Instead, the evidence shows, as in 2009, when the annual net profit was 0, he
received no commission.
and equity belong to another.’)” C. Thorrez Industries, Inc. v. LuK Transmissions Systems, LLC,
2010 WL 1434326 (N.D. Ohio, Apr. 8, 2010).
It is clear that “[a]n implied-in-law, ‘quasi-contract,’ however, is neither necessary nor
appropriate when an express contract governs the dispute between the parties.” Id. “‘Where,
however, there is an enforceable express or implied in fact contract that regulates the relations of
the party or that part of their relations about which issues have arisen, there is no room for quasi
contract.’” Id., quoting 1-1 Corbin On Contracts § 1.20 (emphasis added). Accordingly, because
the Court concludes that there was an enforceable express contract between Conaway and Stark,
the Court dismisses this claim as it relates to any claim of unpaid commissions.
The 2008 Oral Contract
Conaway asserts that Stark breached an oral contract between himself and Don Groom,
Stark’s then Vice President. Conaway contends that Groom came to him to borrow money on
behalf of Stark and that he agreed to loan $200,000. Groom and Stark contend that Conaway
gave it the money to see the company through a difficult economic time. Stark contends that the
money was never intended to be a loan to be repaid, but rather, characterized it as a reduction in
Conaway’s commission. This agreement was never reduced to writing, but it is clear that Stark
used at least $160,000 of the promised $200,000.
To show a breach of an oral contract, Conaway must
“establish the existence and terms of a contract, the plaintiff’s performance of the
contract, the defendant’s breach of the contract, and damages or loss to the
plaintiff. To prove the existence of a contract, a plaintiff must show that the
parties consented to the terms of the contract, that both parties had a “meeting of
the minds,” and that the terms of the contract are definite and certain. That is, a
valid contract consists of an offer, acceptance, and consideration. An offer is
defined as “the manifestation of willingness to enter into a bargain, so made as to
justify another person in understanding that his assent to that bargain is invited
and will conclude it.” Courts determine the existence of a contract as a matter of
Inhalation Plastics, Inc. v. Medex Cardio-Pulmonary, Inc., 2013 WL 992125, *14 (S.D. Ohio,
March 13, 2013), citations omitted.
The parties disagree as to the characterization of this oral agreement. For the purposes of
this Order, mindful of this Court’s obligation to view the evidence in the light most favorable to
Conaway, the non-moving party, the Court will presume Conaway’s recollection of the events to
be true. Even presuming that the parties intended for the $200,000 to be a loan to be repaid,
Conaway cannot point to any of the material terms related to the agreement. He admits in his
deposition that the agreement was never reduced to writing, and that there was never a discussion
about how the money would be returned, the time frame in which it would be returned, or how
much interest, if any, would be paid.
“A contract is not enforceable when the terms are not sufficiently definitive. A valid
contract must be specific as to its essential terms, such as the identity of the parties to be bound,
the subject matter of the contract, and consideration. The terms of a contract are sufficiently
certain or definite where they “provide a basis for determining the existence of a breach and for
giving an appropriate remedy.” Id, citations omitted. The Court “may fashion less essential
terms that were omitted, in order to reach a fair and just result. However, “if the parties’
manifestations taken together as making up the contract, when reasonably interpreted in the light
of all the circumstances, do not enable the court to determine what the agreement is and to
enforce it without, in effect, ‘making a contract for the parties,’ no enforceable obligation
results.” Id. at *15, citations omitted.
In the instant case, the terms of the repayment of the loan is not a “less essential” term
that the Court can fashion. Conaway stated at his deposition that the “terms of the loan was that
he would pay me back the money as soon as Stark Truss could afford to pay me back the
money.” Conaway Depo. P. 45. This “term” is not sufficiently definite for this Court to
determine there has been a breach. Stark does not point to anything in the record to show that
Stark could, in fact, afford to pay him back, or even that there was a time frame contemplated in
which the repayment would occur. The Court concludes that, upon his own admission, Conaway
cannot show terms that are sufficiently definitive to support an enforceable contract between the
parties. As such, Stark has demonstrated that it is entitled to judgment as a matter of law on this
Unjust Enrichment and the 2008 Oral Contract
Conaway asserts a claim for unjust enrichment, again in the alternative, if this Court
concludes that the 2008 agreement was not an enforceable oral contract. As explained above,
‘Unjust enrichment is an equitable doctrine to justify a quasi-contractual remedy that operates in
the absence of an express contract or a contract implied in fact to prevent a party from retaining
money or benefits that in justice and equity belong to another.” Wuliger v. Mfrs. Life Ins. Co.,
567 F.3d 787, 799 (6th Cir.2009).
Upon review, the Court concludes that Conaway has failed to raise a genuine issue of
material fact with regard to his claim for unjust enrichment -- namely, Conaway has failed to
demonstrate any inequitable conduct on behalf of Stark. He has pointed to nothing that, under
the terms he testified governed the loan agreement, would have triggered Stark’s obligation to
pay the loan. He testified that the loan was to be repaid “as soon as Start Truss could afford to
pay me back the money.” The evidence presented shows that, the next year, 2009, the Texas
Plants were not profitable. Conaway does not point to anything to prove that Stark was in a
position to pay back the loan, thus he has failed to show that Stark has not complied with his own
Accordingly, Conaway’s allegation of unjust enrichment is dismissed.
Lastly, Conaway alleges fraud in that Stark intentionally misrepresented to him that it
intended to reimburse him for the $200,000, when in fact it had no intention to do so.
“Under Ohio law, the elements of fraud are as follows
(a) a representation or, where there is a duty to disclose,
concealment of a fact,
(b) which is material to the transaction at hand,
(c) made falsely, with knowledge of its falsity, or with such utter
disregard and recklessness as to whether it is true or false that
knowledge may be inferred,
(d) with the intent of misleading another into relying upon it,
(e) justifiable reliance upon the representation or concealment, and
(f) a resulting injury proximately caused by the reliance.”
Cain v. Chesapeake Exploration, LLC, 2012 WL 3263792, *2 (N.D. Ohio Aug. 2, 2012),
quoting Burr v. Stark Cty. Bd. Of Commrs., 23 Ohio St.3d 69, ¶ 2, 491 N.E.2d 1101 of syllabus
(1986) (citing Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d 407 (1984)). Conaway’s
complaint only alleges that Stark intentionally misrepresented to him that they would repay the
loan. He fails to assert any of the other elements of the claim. This failing aside, it is clear from
the evidence presented in Stark’s motion for summary judgment that Conaway can point to no
evidence to support this claim.
With regard to repayment, Conaway testified that Groom “said he would see that Stark
Truss got the money back to me into my account.” Conaway Depo. P. 47. Again, he testified
that there were no terms negotiated on this payback.
Even construing all of Conaway’s
representations on the conversation in the light most favorable light to him, there is nothing in
his recitation of the events that the Court could conclude was an intentional misrepresentation to
reimburse Conaway. Conaway explained that the only term on the repayment was that Stark
would “pay me back the money as soon as Stark Truss could afford to pay me back the money.”
Conaway Depo. P. 45. When he later requested the money upon his termination in 2010, he
testified that he was told “that the company had lost money so, therefore, they were not going to
pay it.” Conaway Depo. P. 53. Conaway’s deposition testimony appears to show that even if
Stark had promised to repay him, they were not in the position to do so. This fits squarely within
Finally, when asked whether he believed Don Groom was trying to defraud him when he
asked for the $200,000, Conaway answered “No.” Conaway Depo. P. 54. He also testified that
he had known groom for 35 years and “[h]e’s a very good Christian man, I do trust him.” While
true that these statements are Conaway’s opinion and not a legal conclusion, it is telling of the
parties’ intentions during a discussion in which only two people were involved.
Conaway has set forth no facts to support this claim, nor does he point to anything in his
response to Stark’s summary judgment that would satisfy his burden on summary judgment.
Accordingly, Conaway’s claim of fraud is dismissed.
Stark asserts claims for breach of contract and unjust enrichment based upon Conaway’s
draw against funds made in May of 2009. Stark contends that Conaway requested a draw of
$75,000, which was granted. Upon the yearly reconciliation of the account, it was determined
that there were no net profits in the Texas plants. Therefore, Stark contends that pursuant to the
Compensation Agreement, there was an overpayment of $75,000. As this Court has explained,
there is an express contract setting forth the provisions of Conaway’s compensation, and
therefore, the contract governs. As such, there is no claim for unjust enrichment.
As the above reasoning sets forth, the Compensation Agreement at issue contemplates a
yearly reconciliation of the Conaway’s Commission Account. Conaway continues to assert that,
because he earned the funds monthly he earned commission during the three months in 2009 that
the Texas plants were profitable. The Court has already disposed of that argument. The net
profits were to be calculated yearly. Conaway does not dispute that there were no net profits for
the year of 2009. Therefore, his commission should have been zero. As it is clear he withdrew
$75,000, to which it was later determined he was not entitled, Stark’s motion for summary
judgment on this issue is similarly granted.
Stark’s motion for summary judgment is GRANTED in its entirety. Conaway’s C omplaint
is hereby DISMISSED. Judgment is hereby entered in favor of Stark on both the Complaint and
IT IS SO ORDERED.
September 27, 2013
/s/ John R. Adams_______
JUDGE JOHN R. ADAMS
UNITED STATES DISTRICT COURT
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