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Ellicott v. American Capital Energy, Inc.

United States Court of Appeals, First Circuit

October 12, 2018

STEPHEN ELLICOTT, Plaintiff, Appellee,
v.
AMERICAN CAPITAL ENERGY, INC., THOMAS HUNTON and ARTHUR HENNESSEY, Defendants, Appellants.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS HON. F. DENNIS SAYLOR IV, U.S. DISTRICT JUDGE.

          Robert K. Dowd, with whom Robert K. Dowd P.C. was on brief, for appellants.

          Christopher A. Kenney, with whom Anthony L. DeProspo, Jr., and Kenney & Sams, P.C. were on brief, for appellee.

          Before Torruella, Selya, and Lynch, Circuit Judges.

          TORRUELLA, Circuit Judge.

         This case concerns a contract dispute between a solar energy company and a former sales employee. Appellee Stephen Ellicott ("Ellicott") filed suit against Appellants American Capital Energy, Inc. ("ACE") and its two principals, Thomas Hunton ("Hunton") and Arthur Hennessey ("Hennessey") (collectively, "Appellants"), claiming violations of the Massachusetts Wage Act and breach of contract. A jury found for Ellicott. The district court entered judgment and awarded Ellicott $2, 876, 490 in damages, plus reasonable attorney's fees and costs. Displeased with this result, Appellants challenge a series of rulings by the district court. Appellants question, among other things, whether Ellicott's compensation constituted "wages" under the Wage Act and whether the statute of limitations for his Wage Act claim was properly tolled. We affirm after careful review.

         I. Background

         A. Factual Background

         The facts, viewed, as they must be, "in the light most favorable to the verdict," follow. Sinai v. New England Tel. & Tel. Co., 3 F.3d 471, 472 (1st Cir. 1993).

         Appellants Hunton and Hennessey are co-founders of ACE, a company that procures, engineers, and installs large-scale solar energy systems. Hunton is ACE's president and Hennessey its chief financial officer. Hunton and Hennessey are principals of the company.

         In 2007, ACE hired Ellicott as Director of Business Development, tasking him with the sale of large-scale solar installations to commercial clients, primarily in California. Ellicott was not a principal or joint-venturer of ACE, but rather a full-time employee compensated on a commission-draw basis. On April 23, 2008, ACE executed a written contract that established Ellicott's compensation plan. Among other provisions, the compensation plan stated that ACE would pay Ellicott a sales commission of "40% of profit margin on each sale and installation to be paid within [thirty] days after the client pays ACE and installation is complete." The compensation plan also stipulated that the sales commissions "may be reasonably split with various sales support personnel by mutual agreement," and that ACE would pay Ellicott a monthly draw, equal to an annual rate of $120, 000, credited against his commissions.

         From 2007 to 2012, Ellicott sold nine solar installation projects. For each of these projects, the parties stipulated at trial the (1) contract date; (2) project completion date; (3) final payment date; (4) project revenue; and (5) direct project costs. The gross revenue of Ellicott's solar installation projects exceeded $37 million, with eight of the nine projects generating a profit. Seven of the eight profitable installations were paid for in full more than three years before Ellicott filed suit on April 2, 2014. Below, the parties disputed whether Ellicott, in fact, made the "sale" on each of the projects and how the sales commission, if any was due, should be calculated. During trial, Ellicott testified that although it continued to pay him the monthly draw until October 2012, ACE did not pay his earned commissions from any of the profitable projects.

         Beginning in 2010, and again in early 2011, Ellicott inquired about the payment status of his commissions to both Hunton and Hennessey. Ellicott had multiple conversations with Hunton, who assured Ellicott that he would discuss the issue with Hennessey and that the commission payments would be taken care of.

         In October 2011, Ellicott had an in-person meeting with both Hunton and Hennessey to follow up on the payment status of his commissions. There, Hunton and Hennessey informed Ellicott that: (1) he should share his commissions with ACE's support staff; (2) ACE would deduct 5.6% from his commissions for overhead and burden costs and 1% for maintenance costs; (3) certain solar installment projects were actually considered "house accounts" and therefore not a "sale" by Ellicott for which he was entitled to a commission; and (4) ACE would apply a 30% commission rate rather than the 40% established in the 2008 compensation plan. Ellicott did not agree to any of these additional compensation conditions, which were being presented to him for the first time. The meeting ended without resolution. Before concluding, Hennessey told Ellicott that ACE "should be able to start getting [him] some of [his] commissions in December," and that they would provide him with an updated spreadsheet detailing his earned commissions. Ellicott, however, never received the updated spreadsheet.

         After the October 2011 meeting, Ellicott continued to work for ACE and received his monthly draw until October 2012, when ACE ceased making these payments.[1] Ellicott nonetheless continued working for ACE after October 2012. Then, in June 2013, Ellicott's health insurance and cell phone coverage -- both provided by ACE -- were cancelled. Shortly thereafter, Ellicott stopped working for ACE, but the company never formally terminated his employment.

         B. Procedural Background

         Ellicott filed suit against Appellants in Massachusetts Superior Court seeking compensation for the unpaid sales commissions on April 2, 2014. His complaint alleged two claims:

         (1) violation of the Wage Act and (2) breach of contract. On May 16, 2014, Appellants removed the case to the United States ...


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