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Shaffer v. Green Earth Technologies, Inc.

United States District Court, W.D. Texas, San Antonio Division

June 19, 2019

RONALD SHAFFER, Plaintiff,
v.
GREEN EARTH TECHNOLOGIES, INC., Defendant.

          MEMORANDUM OPINION

          Royce C. Lamberth, United States District Judge.

         Ronald Shaffer was employed by Green Earth Technologies, Inc. (GET) from 2008 until he and all other GET employees were terminated on May 15, 2015. Following his termination, Shaffer sued GET for breach of contract and fraud. In 2018, Judge Xavier Rodriguez granted summary judgment to Shaffer on his breach of contract claim. This left the issues of damages and Shaffer's fraud claims for trial. This Court held a one-day bench trial on these remaining issues. The Court will award Shaffer damages on his breach of contract claim plus prejudgment interest and post-judgment interest on these amounts. The Court will not award Shaffer severance pay or money for his unused vacation time. Finally, the Court will deny Shaffer's fraud claims. This means Shaffer is not entitled to recover attorney's fees.

         I. Background

         Shaffer signed two employment contracts in 2008. On January 17, 2008, Shaffer signed the first employment agreement, which named him "Vice President Operation/Global Supply Chain." On July 17, 2008, Shaffer signed the second employment agreement, which named him "Vice President of Operation and Logistics." Both agreements contained an integration and choice-of-law clause, which stated Connecticut law controls for the purposes of interpreting the contract.

         Shaffer agreed on multiple occasions to have his pay reduced because GET had cash flow difficulties. Shaffer was not paid his full bonus in 2008 and was paid less than his full salary in 2009-2015. On May 15, 2015, Shaffer and all other GET employees were terminated. He then filed his original petition on May 6, 2016 in the 166th Judicial District Court of Bexar County, Texas, bringing several claims related to his employment agreement with GET and alleged misrepresentations made by GET. ECF No. 1-1. Shaffer alleged GET breached the employment agreement by failing to pay his full salary, unpaid but earned vacation days, and severance pay. GET removed to federal Court on May 10, 2017. ECF No. 1. On October 4, 2018, Judge Xavier Rodriguez, who initially presided over this case, granted summary judgment to Shaffer on his breach of contract claim. In this opinion, Judge Rodriguez determined the July 17, 2008 agreement entirely superseded the January 17, 2008 agreement, as it was "complete on its' face, contain[ed] a full integration clause, and its validity is not disputed by either party." Order 11, ECF No. 55. This left the amount of damages Shaffer suffered as a result of the breach of contract and Shaffer's fraud claims as the only issues remaining for trial. The matter was transferred to Judge Lamberth on November 6, 2018, and a bench trial was held on March 23, 2019.

         II. Discussion

         A. Shaffer is entitled to payments to fulfill the 2008 bonus and to account for his reduced salary in 2009-2015

         The July 17, 2008 employment agreement set Shaffer's salary at $150, 000 per year. PL's Ex. 5. The agreement also provided that "[i]f during calendar year 2008, shipments in any one calendar month unit sales exceed the threshold of one million units in one calendar month you will be receive [sic] a one time cash bonus equal to 50% of your annual salary ($75, 000) payable." Id.

         Shaffer was paid his entire salary of $150, 000 in 2008, but did not receive the entire bonus even though the sales goal was met. See PL's Ex. 52; PL's Proposed Findings of Fact & Conclusions of Law, ECF No. 66 [hereinafter ECF No. 66]; Def.'s Proposed Findings of Fact & Conclusions of Law, ECF No. 67-1 [hereinafter ECF No. 67-1]. Shaffer only received $25, 000 of the one time $75, 000 bonus in 2008. ECF No. 66; ECF No. 67-1. GET concedes in its proposed findings of fact and conclusions of law that Shaffer is entitled to the remaining $50, 000 of the 2008 bonus. ECF No. 67-1.

         Further, Shaffer agreed to temporarily defer compensation on multiple occasions. He participated in three salary reduction programs in which he received stock in exchange for temporarily forfeiting his compensation. The first salary reduction program began on July 17, 2013; the second salary reduction program began on January 2, 2014; and the third salary reduction program began on May 14, 2014. PL's Ex 30. Overall, Shaffer was paid less than his full salary in 2009-2015. Shaffer was only paid $135, 311.80 of his $150, 000 salary in 2009, $121, 170.02'of his $150, 000 salary in 2010, $140, 000 of his $150, 000 salary in 2011, $147, 115.37 of his $150, 000 salary in 2012, $142, 788.43 of his $150, 000 salary in 2013, and $60, 000 of his $150, 000 salary in 2014. PL's Ex. 8; ECF No. 66; ECF No. 67-1; Trial Tr. 92-95.[1] For 2015, Shaffer was paid $27, 500 prior to his termination in May, whereas Shaffer's salary for five months work calculated on a pro rata basis should have been $62, 500. ECF No. 66; ECF No. 67-1; Trial Tr. 90-91[2]

         The parties agree Shaffer is entitled to receive his full compensation for these years. Therefore, Shaffer is entitled to recover $14, 688.20 as unpaid compensation for 2009, $28, 829.98 as unpaid compensation for 2010, $10, 000 as unpaid compensation for 2011, $2, 884.63 as unpaid compensation for 2012, $7, 211.57 as unpaid compensation for 2013, $90, 000 as unpaid compensation for 2014, and $35, 000 as unpaid compensation for 2015.

         B. Shaffer is not entitled to severance pay

         The July 17, 2008 employment agreement does not contain any language regarding severance pay. This silence is extremely significant as the July agreement contains a clause that "[t]his is the complete agreement and cannot be modified unless reduced to writing and signed by you and the Company." PL's Ex. 5. Shaffer did not present any evidence the July agreement was modified to incorporate a severance clause.

         The July contract's silence as to severance pay stands in stark contrast to the severance clause in the January 17, 2008 agreement. The January 17, 2008 agreement contained a provision that "[i]n the event that the Company elects to no longer require your services you will continue to receive your salary for six months but will not receive additional vesting shares, bonus or other employee benefits. You will not be [sic] receive any continued salary in the events that you are terminated for cause or either resign from the Company." PL's Ex. 6. The July agreement entirely superseded the January agreement, and omitted this provision. Because the July agreement does not say anything about severance pay, is a complete agreement, and contains an integration clause, evidence of the existence of a severance clause in the January agreement cannot be used to vary the July contract. See Alstom Power, Inc. v. Balcke-Durr, Inc., 269 Conn. 599, 609-10 (Conn. 2004). Thus, Shaffer is not entitled to any severance pay.

         C. Shaffer k not entitled to payment for his unused vacation time

         Shaffer alleges he is entitled to payment for twenty weeks of earned vacation accrued during his employment with GET in the amount of $57, 692.40. However, the July 17, 2008 employment agreement does not contain any language regarding pay for unused vacation time and GET did not have a policy to compensate employees for unused vacation time upon termination.

         The July contract solely stated Shaffer "will be entitled to three (3) weeks paid vacation earned on a pro rata basis over the course of the year." PL's Ex. 5. This contract term does not entitle Shaffer to receive any payment for accrued benefits upon termination. Further, the July agreement contained an integration clause that "[t]his is the complete agreement and cannot be modified unless reduced to writing and signed by you and the Company." Id. Accordingly, the employment contract does not entitle Shaffer to any payment for his unused vacation time.

         Connecticut law entitles employees to compensation for accrued benefits upon termination if an employer policy provides for such a payment. Connecticut law states:

If an employer policy or collective bargaining agreement provides for the payment of accrued fringe benefits upon termination, including but not limited to paid vacations, holidays, sick days and earned leave, and an employee is terminated without having received such accrued fringe benefits, such employee shall be compensated for such accrued fringe benefits exclusive of normal pension benefits in the form of wages in accordance with such agreement or policy ....

Conn. Gen. Stat. § 31-76k (2019). But Shaffer does not fall within this statute. He only contends he had a verbal understanding with GET that vacation benefits were accrued on an annual basis and an employee would be compensated for unused vacation time at the time the employee left the company. Trial Tr. 73, 100. Shaffer readily acknowledges this was never committed to writing and GET never had a policy regarding vacation benefits beyond what was written in the July employment agreement. Trial Tr. 100. During the trial, defense counsel cross-examined Shaffer about GET's lack of policy to pay employees for accrued benefits upon termination:

Q [Defense Counsel]. No. written employment policies or procedures [at GET]?
A [Shaffer]. Not that I ever saw.
Q [Defense Counsel]. Did you ever see a ...

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