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Roncone v. Phoenix Payment Systems, Inc.

Court of Chancery of Delaware

November 26, 2014


Submitted: April 9, 2014

G. Kevin Fasic, Esquire and Bonnie E. Copeland, Esquire of Cooch and Taylor, P.A., Wilmington, Delaware, Attorneys for Plaintiff.

Ian Connor Bifferato, Esquire, Thomas F. Driscoll III, Esquire, and J. Zachary Haupt, Esquire of Bifferato LLC, Wilmington, Delaware, and Frederick R. Kessler, Esquire of Wollmuth Maher & Deutsch LLP, New York, New York, Attorneys for Defendants.


NOBLE, Vice Chancellor

Plaintiff Edmond J. Roncone ("Roncone") is a former sales employee of Defendant Phoenix Payment Systems, Inc. ("EPX").[1] During Roncone's employment, the other Defendants were also EPX employees: Ray Moyer ("Moyer") was Chief Executive Officer; Nancy Reilly ("Reilly") was Chief Financial Officer; and Joe Babin ("Babin") was Vice President of Sales. After a dispute with his employer over allegedly unpaid sales commissions, Roncone resigned and soon filed a complaint with the American Arbitration Association ("AAA" and the "Arbitration") against the Defendants in June 2012. He asserted claims for violations of the Delaware Wage Payment and Collection Act ("WPCA"), [2] breach of contract, and quantum meruit. In response, the Defendants filed counterclaims for unjust enrichment and breach of the covenant of good faith and fair dealing.

The arbitration proceeding lasted over a year and included an opinion denying the Defendants' motion for summary judgment and an opinion granting Roncone's motion in limine. After a three-day hearing and opening and reply briefs submitted by the parties, the arbitrator ruled in Roncone's favor and against the Defendants on the WPCA claim[3] and the counterclaims in the Post-Arbitration Interim Opinion, dated July 12, 2013 (the "Interim Opinion").[4] The arbitrator found the Defendants jointly and severally liable for $71, 424.23 in "unpaid commissions" due to Roncone, $71, 424.23 in liquidated damages, and attorneys' fees and costs in an amount to be determined. With the benefit of additional briefing, the arbitrator later awarded attorneys' fees and costs of $128, 671.42 to Roncone.[5] Thus, in the Final Award of Arbitrator (the "Final Award"), dated September 10, 2013, the arbitrator awarded a total of $271, 694.88[6] to Roncone.

Roncone brought this action to confirm the Final Award. The Defendants have moved for summary judgment on their counterclaims to vacate, in part, or to modify the arbitration award.[7]

For the following reasons, the Court concludes that summary judgment in favor of Roncone is warranted, that confirmation of the Final Award is appropriate, and that Defendants' counterclaims should be dismissed.[8]


A. The Dispute among the Parties

When Roncone was considering whether to join EPX in December 2007, he received various documents reflecting salary and commission terms for his prospective position. After negotiating an additional term providing for an annual $50, 000 draw against his commissions, Roncone executed the various documents in January 2008.

One of those documents was the Employment Agreement that provided an annual salary of $100, 000, which was paid throughout his employment with EPX. The Employment Agreement generally requires arbitration of "any and all claims or disputes arising out of this letter agreement and any and all claims arising from or relating to [Roncone's] employment with [EPX], including (but not limited to) . . . claims of . . . breach of contract . . . [and] claims regarding commissions."[9]Further, it established that "[t]he arbitrator's decision must be written and must include the findings of fact and law that support the decision."[10]

Another document Roncone agreed to was the Sales Commission Plan (the "2007 Plan").[11] Certain terms of the 2007 Plan and a later 2009 Plan, defined herein—primarily whether the listed "Sales Goals" were preconditions to earning or receiving commissions—were in dispute in the Arbitration. The 2007 Plan commission rates ranged from 0.75% to 12%, with no renewal rate. From the start of his employment until July 2009, Roncone did not receive any commissions under the 2007 Plan.

In July 2009, EPX revised its Sales Commission Plan (the "2009 Plan").[12]The 2009 Plan provided for higher commission percentages ranging from 8% to 12%, with a 4% renewal rate. The 2009 Plan also contemplated that EPX sales employees would receive a base salary of $60, 000. Although Roncone's commissions were now calculated based on the 2009 Plan, he continued to receive a $100, 000 annual salary.

Sometime during 2010, an employee in EPX's accounting department was instructed to calculate commissions for salespersons, including Roncone. Roncone's commission report was based on the percentages in the 2009 Plan and the calculations were not conditioned on whether he had met the "Sales Goals." Later in 2010, Roncone and Moyer came to an unwritten understanding that for years ...

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