RICE v. WISHGARD, LLC

Filing 8

MEMORANDUM AND ORDER re 1 Bankruptcy Appeal. The Memorandum Opinion of U.S. Bankruptcy Judge Carlota M. Bohm dated 1/13/15 hereby is AFFIRMED. A Rule 58 judgment order will be entered contemporaneously herewith, and this case will be marked closed. Signed by Judge Cathy Bissoon on 12/14/15. (dcd)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
WILLIAM A. RICE,
Appellant,
v.
WISHGARD, LLC,
Appellee.

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Civil Action No. 15-279
Judge Cathy Bissoon

MEMORANDUM AND ORDER
I. MEMORANDUM
For the reasons that follow, the Memorandum Opinion of Bankruptcy Judge Carlota M.
Bӧhm, dated January 13, 2015, will be affirmed in its entirety.1
Appellee Wishgard, LLC (“Wishgard”) is a two-member, Pennsylvania-LLC involved in
the acquisition and development of oil and gas rights. Appellee William A. Rice (“Rice”)
worked with Wishgard from approximately December 2010 until May 2013. Bankr. Op. at 2-3.
Involuntary bankruptcy proceedings were commenced against Wishgard in February
2013, and, upon its request, the case was converted to one under Chapter 11. Id. at 2. In August
2013, Rice filed a Proof of Claim in the bankruptcy proceedings, claiming entitlement to unpaid
wages and commissions. Id. at 3. Rice subsequently filed an Application seeking payment of
postpetition commissions and salary. Wishgard filed an Objection to Rice’s Proof of Claim,

The Court agrees with Judge Bӧhm and the parties that her decision addressed “core matter[s]”
pursuant to 28 U.S.C. §§ 157(a) and (b)(2)(B). See Bankr. Op. (filed under Doc. 1-10) at 2 n.1;
Appellant’s Br. (Doc. 2) at 1; and Appellee’s Br. (Doc. 5) at 2. The Court also agrees with
Judge Bӧhm the she was not, under Stern v. Marshall, required to issue the decision by way of
proposed findings and conclusions to the District Court. See Bankr. Op. at 2 n.1.
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and Wishgard’s Objection and Rice’s postpetition Application were placed on the same
discovery and hearing schedule. Id.
Following a three-day evidentiary hearing, Judge Bӧhm issued a 35-page Memorandum
Opinion, sustaining Wishgard’s Objection to Rice’s Proof of Claim and denying Rice’s
Application for postpetition-expenses. Based on the extensive evidentiary record placed before
her, Judge Bӧhm determined that Wishgard had paid Rice no less than $370,653.00 pursuant to
oral compensation-agreements entered between the parties, and that this amount substantially
exceeded the amount proven by Rice to be owed. Id. at 33-34.
Given that the terms of Rice’s compensation were not reduced to writing, Judge Bӧhm’s
analyses, by necessity, relied heavily on the testimony of Rice and Wishgard-principal Edward
Tygard. Cf. id. at 21 (“[T]he [Bankruptcy] Court notes the difficulty that results when . . .
complex agreement[s are] not reduced to writing. Accordingly, it [has become] this [c]ourt’s
task to define the agreement of the parties, based upon the credible evidence[.]”). Unfortunately
for Rice, however, Judge Bӧhm found Mr. Tygard (and other Wishgard witnesses) to be more
credible, identifying in Rice’s testimony numerous inconsistencies, incoherences and statementsagainst-interest.2 Judge Bӧhm’s credibility determinations are supported by the record, and they

See, e.g., id. at 7-8 (finding “significant discrepanc[ies]” between positions taken by Rice,
at different times, regarding effective-date of parties’ commission-agreement); id. at 10
(Mr. Tygard’s testimony regarding terms of commission-agreement were more credible than
Rice’s); id. at 11-12 (Rice’s purported understandings of compensation agreements were
“inconsistent with the credible evidence,” “inexplicable,” “undermin[ed],” “inconceivable”
and “far-fetched”); id. at 12 (finding credible Mr. Tygard’s testimony that Rice, himself,
verbally manifested his desire to be independent contractor, instead of employee, for taxreasons); id. at 13 (quoting Rice’s own deposition testimony indicating that, contrary to his
litigation position, “net proceeds” meant proceeds after deduction of “overhead”); and id. at 14
(weighing contradictory testimony of Messrs. Rice and Tygard regarding bi-weekly payments to
Rice of $2,500, and finding more credible Mr. Tygard’s testimony that these payments were
draw-downs on commissions owed, not salary, and finding that evidence “[did] not indicate that
[Rice’s] role . . . was ever that of a salaried employee”). This is but a sampling of the adverse
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easily withstand the applicable standards of review. See In re Dr. R.C. Samanta Roy Inst. of Sci.
Tech. Inc., 2011 WL 2350095, *2 (3d Cir. Jun. 15, 2011) (“due regard shall be given the
opportunity of the bankruptcy court to judge the credibility of the witnesses,” and such
determinations “will not be set aside unless [they are] completely devoid of minimum
evidentiary support displaying some hue of credibility or bear[] no rational relationship to the
supportive evidentiary data”) (citation to published, binding authority omitted).
With this foundation established, Rice’s numerous arguments on appeal fall like so many
pins in a lane. Rice’s arguments under the Pennsylvania Wage Payment and Collection Law
(“WPCL”) gain no traction, because Judge Bӧhm concluded, based on a review of the entire
record and her credibility determinations, that Rice was not an employee. See Bankr. Op. at 12,
14, 34 & n.26. Although Rice faults Judge Bӧhm for having credited the parties’ “subjective”
beliefs regarding the their work-relationship, to the contrary, she relied on the only evidence in
the record, namely, the parties’ witness-testimony. See discussion supra (highlighting verbalnature of parties’ agreements). Indeed, Judge Bӧhm found that Rice’s own statements regarding
the work-relationship, as established by credible evidence, were consistent with him being an
independent-contractor, not an employee. See id. at 12 (citing trial testimony). Given that the
only evidence available was testimonial in nature, Judge Bӧhm hardly erred in considering
Rice’s stated-understandings. See discussions supra; see also generally Pasour v. Unemp’t
Comp. Bd., 54 A.3d 134, 138 (Pa. Commw. 2012) (in determining employee-status, “[n]o single
factor . . . control[s, and] the ultimate conclusion must be based on the totality of the
circumstances,” including claimant’s own statements) (citation omitted). In any event,

credibility determinations made against Rice, appearing in the first fourteen pages of Judge
Bӧhm’s Opinion. Were the District Court to catalogue them all, this footnote would span several
full pages of text.
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Judge Bӧhm’s determination that Rice was not an employee enjoys ample evidentiary support.
See Bankr. Op. at 34 n.26; see also Appellee’s Br. (Doc. 5) at 9-10 (collecting numerous factfindings of Judge Bӧhm, throughout Opinion, supporting conclusion that Rice was not an
employee).
Rice next attacks Judge Bӧhm’s determination that the parties’ oral agreement regarding
commissions included an understanding that, in order to be paid, Rice was expected to be
“involved throughout the particular project” in question. See Bankr. Op. at 9-10. Whether
intentional or not, Rice’s framing of this issue on appeal is misleading. In essence, his counsel
suggests that Judge Bӧhm gap-filled an otherwise-clear agreement between the parties by
inserting “a ‘material involvement’ clause.” See Appellant’s Br. at 15. The parties’ agreement
was verbal, not written, so any reference to a “material involvement clause” is somewhat
specious. Likewise, Judge Bӧhm never characterized Rice’s requisite level-of-participation as
that of “material involvement,” that is a phrase supplied by Rice’s counsel. While these
distinctions are semantical in nature, and may be viewed as falling within a usual range of
lawyerly “spin,” the Court’s sensitivity to them foreshadows the underlying weaknesses of
Rice’s positions.
Based on her review of the entire record, and numerous, supported credibility
determinations, Judge Bӧhm found that the parties’ verbal agreement regarding commissions
included a mutual understanding that, in order for Rice to get paid, he was required to be
involved in a given project throughout its completion. Id. at 10. Among other things,
Judge Bӧhm accepted as credible Mr. Tygard’s testimony that commission payments were
intended to incentivize Rice’s continued performance, and she relied on record-evidence
revealing that Wishgard itself could not profit from an executed lease-deal until “a number of

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[additional] steps” were completed. Id. at 10. This Court has no reason to upset Judge Bӧhm’s
common-sense determination that Rice’s entitlement to commissions did not vest until it became
clear that Wishgard, itself, would profit. Nor did Judge Bӧhm err in determining that Rice’s
litigation position, namely, that the parties mutually agreed he would enjoy commissions on all
leases secured by Wishgard, regardless of his involvement, was “far-fetched” and “inconsistent
with even [Rice’s own] statements.” See id. at 11-12.
In sum, Judge Bӧhm’s determinations regarding the terms of the parties’ commission
agreement, and the amounts owed to Rice thereunder, easily withstand appellate review.
All of Rice’s arguments to the contrary are rejected, explicitly or implicitly, by the Court’s
reasoning above.
Rice’s next few charges of error, which return to the purported applicability of the
WPCL, are red herrings. Judge Bӧhm determined that Rice was not an “employee”; that,
at no point, was he was a “salaried” worker owed wages; and that, during the period in which he
did receive bi-weekly payments, those payments were draw-downs on commissions. See id.
at 12, 14, 23, 27, 34 & n.26. None of these determinations have been shown to be erroneous,
and the WPCL has no application in this case.
Finally, the Court rejects Rice’s challenges to Judge Bӧhm’s determinations regarding
“net proceeds,” as related to the parties’ commissions-agreement. As Wishgard explains,
Judge Bӧhm made factual findings regarding the parties’ usage of this term, highlighting Rice’s
conflicting testimony. See Bankr. Op. at 12-13 & n.10 (contrasting Rice’s testimony at hearing,
where he claimed to “never underst[and] a precise definition with respect to what constitutes net
proceeds,” with his deposition testimony, confirming his understanding that Wishgard’s

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“overhead” would be deducted). Judge Bӧhm found Wishgard’s evidence more credible,
and this Court has no basis for disturbing her determination.3
For all of the reasons stated above, the Memorandum Opinion of U.S. Bankruptcy Judge
Carlota M. Bӧhm dated January 13, 2015 hereby is AFFIRMED. A Rule 58 judgment order
will be entered contemporaneously herewith, and this case will be marked closed.
IT IS SO ORDERED.

December 14, 2015

s\Cathy Bissoon
Cathy Bissoon
United States District Judge

cc (via ECF email notification):
All Counsel of Record

Rice’s objections regarding Judge Bӧhm’s consideration of the Wishgard-spreadsheet dated
April 9, 2014, see Appellant’s Br. (Doc. 2) at pg. 29, are summarily rejected. At the hearing,
Rice’s own counsel submitted the document as an exhibit; Rice’s expert relied on it extensively,
both in her testimony and in her written report (to which the spreadsheet was attached as an
exhibit); and, unsurprisingly, Rice stated no objection to the document’s admission at the close
of the hearing. Compare Doc. 623 in Bankr. Dkt. at pg. 18 of 22 (identifying spreadsheet as
Exhibit No. 45 “filed on behalf of William A. Rice”) with Doc. 3-19 in this case, at pg. 27 of 46
(transcript of hearing dated Sept. 11, 2014, identifying spreadsheet as “[Rice’s] Exhibit 45”);
Doc. 3-43 at pgs. 5 through 7 of 49 (Rice’s expert report, relying on spreadsheet for purposes
commission-calculations); Doc. 3-44 at pgs. 18 through 32 of 49 (spreadsheet, as attachment to
Rice’s expert report); and Doc. 3-25 at pgs. 19 through 20 of 25 (transcript of hearing dated
Sept. 25, 2014) (confirming lack of objection to admission of exhibits, including spreadsheet).
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