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Caruthers v. Vitex, Inc.

United States District Court, W.D. North Carolina, Statesville Division

August 8, 2019

VITEX, INC., Defendant.


          Kenneth D. Bell United States District Judge.

         THIS MATTER is before the Court on the parties' cross motions for summary judgment. The Court has carefully reviewed the motion and considered the parties' arguments, briefs and exhibits. For the reasons discussed below, the Court will GRANT IN PART and DENY IN PART Plaintiff's motion (Doc. No. 17), and GRANT IN PART and DENY IN PART Defendant's motion (Doc. No. 15).


         This case arises out of a dispute regarding payment of commissions under the terms of an agreement for independent contracting services between Plaintiff Thomas M. Caruthers (“Plaintiff”) and Vitex, Inc. (“Vitex”). The undisputed facts are as follows:

         Vitex provides technology consulting services to financial institutions. Its material services are provided by “salesmen” and “consultants.” Salesmen meet with prospective clients to sell Vitex's consulting services, while consultants perform the actual services once a sale is made. Vitex's workforce is comprised mainly of independent contractors who are compensated by payment of commissions based on sales.

         Plaintiff began working as a “salesman” for Vitex in January 2014. The terms of his employment were governed by a “Contract Consulting Services Master Agreement” (“Master Agreement”) and a single addendum thereto. The Master Agreement provides that Plaintiff was to be paid up to 15% of the gross revenue received by Vitex for each sale. 5% would be paid for generation of the client lead, 5% would be paid for drafting the proposal, and 5% would be paid for closing the sale. The Master Agreement provides that commissions would not become due to be paid until Vitex received payments from the client for the services. If the client never paid, the Plaintiff would not receive any payment.

         At some point in 2015, Plaintiff closed a sale to CCB Community Bank (“CCB”), where he personally banks. (Doc. No. 19, at 5.) Because of Plaintiff's relationship with CCB, Vitex's President, David Powell, authorized Plaintiff to also act as a consultant and provide Vitex services to CCB after the sale closed. (Id.) The Master Agreement and addendum only covered the terms of compensation for sales, not consulting. (Id.) As a result, Powell “verbally agreed that Vitex would pay [Plaintiff] 40% of gross revenue” for the consulting services provided to CCB, “in addition to the 15% he would receive for completing the sale” to CCB. (Id.) The parties did not memorialize this agreement in writing or create an addendum to the Master Agreement.

         The principal issue in this action is whether or not Plaintiff is entitled to certain commission payments that did not become due to be paid to him until after the parties terminated their relationship. The Master Agreement provides the following:

5. Forfeiture of Commissions: If Contractor or Company Terminates the Contract Consulting Services Master Agreement or applicable addendums for any reason, fixed fee payments end immediately and the following policy applies for future commission payments:
Contractor Initiated Termination: All future commissions from active engagement will be forfeited effective with the notification date of separation.
Company Initiated Termination: All commissions earned on active engagements (including “signed” but not yet active) will be paid for a period of six (6) months from the date of termination.

(Doc. No. 19-1, at ¶ 5.) Plaintiff contends that Vitex terminated the agreement, while Vitex contends that Plaintiff initiated termination of the agreement.

         In May 2016, Powell stepped down as president and Randall Roth took control of Vitex. Plaintiff contends that Roth cut off Plaintiff's access to his Vitex email account on June 1, 2016. (Doc. No. 19, at 6.) Vitex asserts that it did so because Plaintiff allegedly deleted 5, 500 emails from his Vitex account. Roth then sent an email to Plaintiff stating that his performance as a Vitex contractor “over the past several months” had been “completely unacceptable.” (Doc. No. 19-7.) The email informed Plaintiff he was to have no further contact with any Vitex clients and that “after we complete our review of the content of the deleted emails we will determine the appropriate actions to take and your status as a Vitex contractor.” Id. Plaintiff testified that “based on the tone and tenor” of Roth's email, he was under the belief that Vitex no longer wanted him to continue working as a contractor. (Doc. No. 19, at 6.)

         The parties agree that five days after Roth sent this email, Plaintiff had a telephone conference with Roth and Powell to discuss Plaintiff's employment status. This phone call is the center of the parties' dispute. Roth and Powell testified that during this call, Plaintiff “requested that we find a way to end his relationship with Vitex.” (Doc. No. 20, at 3.) Plaintiff testified that he does not recall saying this. Id. Vitex contends that prior to this alleged statement by Plaintiff, ...

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