Russo v. Onpath Fed. Credit Union

388 So.3d 1274

23-537 (La.App. 5 Cir. 5/29/24)

Daniel RUSSO and Reilly Cavanaugh

v.ONPATH FEDERAL CREDIT UNION

NO. 23-CA-537

Court of Appeal of Louisiana, Fifth Circuit.

May 29, 2024

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT, PARISH OF JEFFERSON, STATE OF LOUISIANA, NO. 840-579, DIVISION "C", HONORABLE JUNE B. DARENSBURG, JUDGE PRESIDING

COUNSEL FOR PLAINTIFF/APPELLANT, DANIEL RUSSO AND REILLY CAVANAUGH, Michael E. Lillis, Lawrence J. Centola, III, New Orleans

COUNSEL FOR DEFENDANT/APPELLEE, ONPATH FEDERAL CREDIT UNION, Susan F. Desmond

Panel composed of Judges Jude G. Gravois, Scott U. Schlegel, and Timothy S. Marcel

MARCEL, J.

₁In this suit arising from a Petition for Wages, Penalties, and Attorney’s Fees Pursuant to La. R.S. 23:631 et seq. and an Alternative Petition for Damages, plaintiffs Daniel Russo and Reilly Cavanaugh appeal a judgment of the trial court dismissing their claims against their former employer, OnPath Federal Credit Union. For the following reasons, we affirm the judgment of the trial court.

BACKGROUND

In January 2022, OnPath enacted a Commercial Lending Incentive Plan for the four-member commercial lending team in order to grow OnPath’s commercial loan portfolio during the 2022 fiscal year. Mr. Russo was leader of the four member commercial lending team, which included Mr. Cavanaugh. Under this plan proposed by Mr. Russo, the commercial lending team would receive incentive payments at the close of the 2022 fiscal year if certain deliverables were met. The plan was memorialized in a two-page document signed by both the Chief Executive Officer, Jared Freeman, and the Chief Operating Officer, Kristen DeDual. This document described the goals to be met for the team incentive to be payable, the team incentive formula, and an illustrative example for calculating the team incentive formula.

Over the course of 2022, the team grew OnPath’s portfolio and met and exceeded the goals specified in the incentive plan. In November of 2022, Mr. Russo engaged in conversations (both in person and via email) with Ms. DeDual concerning the anticipated team incentive plan payment.¹

Using the example contained in the plan document, Mr. Russo calculated the anticipated payout to be approximately $1,195,412.56 for the team or $298,853.14 for each of the four team members. Ms. DeDual argued the example did not accurately apply the formula ₂recited in the plan document. According to Ms. DeDual’s calculations, the team incentive payout for individual members would be closer to $50,000.00 each. Later recalculations determined each team member would receive $31,279.09. OnPath paid each commercial team member this amount, despite a written request in January 2023 for each team member to be paid $298,853.14. On March 9, 2023, OnPath terminated Mr. Russo and two members of the commercial lending team resigned, including Mr. Cavanaugh.

On May 10, 2023, Mr. Russo and Mr. Cavanaugh filed a Petition for Wages, Penalties, and Attorney’s Fees pursuant to the Louisiana Wage Payment Statute, La. R.S. 23:631, et seq. and, alternatively, a Petition for Damages alleging claims for breach of contract, detrimental reliance, and unjust enrichment. Plaintiffs elected to proceed on their claims for lost wages via summary proceedings, as is permitted under La. R.S. 23:631(B). On May 11, 2023, the trial court issued a Rule to Show Cause why plaintiffs’ Petition for Wages, Penalties, & Attorney’s Fees Pursuant to La. R.S. 23:631 et seq, should not be granted.

A trial on the wages claims was held on July 10, 2023, which included testimonial evidence from Mr. Russo, Ms. DeDual, and Mr. Freedman, as well as documentary evidence. At the conclusion of arguments, the trial court found that the amount in dispute was not an amount due under the terms of the Incentive Plan, but rather it was an incentive amount that would only be paid if there was growth and profit. On that basis, the trial court denied plaintiffs’ La. R.S. 23:631 claims and also denied plaintiffs’ claims for breach of contract, detrimental reliance, and unjust enrichment. Plaintiffs’ timely appeal followed.

On appeal, plaintiffs raise eight assignments of error. We consider these en globo in our discussion below, with particular focus on the first two and most significant assigned errors: whether the trial court erred in ruling the amounts owed to Mr. Russo and Mr. Cavanaugh were not wages per La. R.S. 23:631, and whether ₃the trial court erred in its interpretation of the terms of the Incentive Plan concerning the calculation of wages owed.

DISCUSSION

"Wages" under La. R.S. 23:631

[1–3] The Louisiana Wage Payment Act, La. R.S. 23:631, et seq., is designed to compel the prompt payment of earned wages upon an employee’s discharge or resignation. Calamia v. Core Labs., LP, 17-635 (La. App. 5 Cir. 5/30/18), 249 So.3d 1038, 1042. La. R.S. 23:631 requires employers to pay employees the amount then due under the terms of employment no later than fifteen days from the date of the termination of employment. In the event the amount owed is disputed, La. R.S. 23:631(B) specifically grants the employee the right to file an action to enforce a wage claim and proceed via summary procedure under La. C.C.P. art. 2592. La. R.S. 23:632 states that employers who fail or refuse to comply with La. R.S. 23:631 shall be liable to the employee for penalty wages. La. R.S. 23:632(B) creates an exception to the payment of penalty wages for employers in situations where the court finds that an employer’s dispute over the amount of wages due was in good faith. When a bona fide dispute exists over the amount of wages due, an employer’s failure to pay is not an arbitrary refusal and no penalties will be awarded under the penalty wage statute. Kaplon v. Rimkus Consulting Grp., Ina of Louisiana, 09-1275 (La. App. 4 Cir. 4/28/10), 39 So.3d 725, 733, writ denied, 10-1207 (La. 7/2/10), 39 So.3d 587. The burden of proof rests upon the employee to show by a preponderance of the evidence the facts which establish his claim for wages and penalties under La. R.S. 23:631 and 23:632. Calamia, supra.

[4–9] Wages, though not defined in the statute, are equivalent to the amount then due under the terms of employment. Boyd v. Gynecologic Associates of Jefferson Par., Inc., 08-1263 (La. App. 5 Cir. 5/26/09), 15 So.3d 268, 272. Wages include compensation that is earned during a pay period. ₄Boudreaux v. Hamilton Med. Grp., Inc., 94-879 (La. 10/17/94), 644 So.2d 619, 622. Whether a bonus constitutes a "wage" under La. R.S. 23:632, et seq. is mixed question of law and fact generally reviewed under the manifest error standard. Locke v. MADCON Corp., 22-630 (La. App. 1 Cir. 12/22/22), 360 So.3d 519, 526, writ denied, 23-95 (La. 4/4/23), 358 So.3d 866. Bonuses paid as part of an incentive plan to encourage longevity or production may be called "bonuses" but are more in the nature of commissions and are considered wages. Kaplon, supra. Commissions are considered wages for the purposes of La. R.S. 23:631-32. Jeansonne v. Schmolke, 09-1467 (La. App. 4 Cir. 5/19/10), 40 So.3d 347, 358.² If they are unpaid, the employee has a right to recover them as they do any other wage.

[10] Upon examination of the record before us, we find that the trial court manifestly erred in determining that the payments owed under the Incentive Plan were not wages for the purposes of La. R.S. 23:631. Review of OnPath Federal Credit Union Commercial Lending Incentive Plan indicates that the team incentives would be paid provided the minimum goals were met. It is undisputed by the parties that the commercial lending team members, including plaintiffs, met the minimum goals specified in the incentive plan and therefore earned incentive payments. Under the definitions stated above, these payments are wages for the purposes of La. R.S. 23:631.

Nevertheless, for reasons articulated more fully infra, we find no manifest error in the trial court’s determination that no additional wages beyond those already paid were owed to plaintiffs by OnPath under the terms of the Incentive Plan.

Interpretation of the Incentive Plan

[11] ₅Plaintiffs’ claims for wages under La. R.S. 23:631 are inextricably linked to their claims for breach of contract because the contract at issue, the Incentive Plan, provides the basis for calculation of the wages owed. Whether the contract has been breached or honored by OnPath depends on the interpretation of the terms stated therein.

[12, 13] Interpretation of a contract is the determination of the common intent of the parties. La. C.C. art. 2045. A contract or document is ambiguous when its written terms are susceptible to more than one interpretation, there is uncertainty as to its provision, or the parties’ intent cannot be ascertained from the language used. All Am, Healthcare, L.L.C. v. Dichiara, 18-432 (La. App. 5 Cir. 12/27/18), 263 So.3d 922, 928 (citing Leftwich v. New Orleans Weddings Magazine, 14-547 (La. App. 5 Cir. 11/25/14), 165 So.3d 916, 921.) When the terms of a contract are susceptible to more than one interpretation, there is uncertainty as to its provision, or the parties’ intent cannot be ascertained from the language employed, parol evidence is admissible to clarify the ambiguity or show the intention of the parties. First Bank & Tr. v. Redman Gaming of Louisiana, Inc., 13-369 (La. App. 5 Cir. 12/12/13), 131 So.3d 224, 228. In this posture, determining the intent of the parties becomes, in part, a question of fact. Id.

The contract between the parties states in relevant part: Team incentive:

• 5% of Net/ Net profitability to be paid out January of 2023 based on overall profitability at year end. Profitability ratios are calculated based on Weighted Average Rate net of Charge off, Operating Expense, Cost of Funds and Opportunity Cost

• Goal is a minimum of 1.5% to earn incentive

• Incentive calculated on 5% of the dollar amount over the 1.5% threshold

Example: As of...