639 S.W.3d 108
Tex. App.2020Background:
- Perthuis was hired as BMGL Vice President of Sales & Marketing; Offer Letter provided salary and a 3.5% commission on his "net sales" and stated employment was at-will.
- While employed he procured large "channel partner" contracts (e.g., Natera) and received quarterly commissions based on billed revenue (adjusted for bad debt).
- BMGL terminated Perthuis on January 23, 2017; BMGL executed an amended Natera LSA effective January 30, 2017 and continued to sell to accounts Perthuis had procured.
- Perthuis sued claiming entitlement to 3.5% commissions on post-termination sales he had procured; the jury was instructed using a "procuring cause" definition and awarded about $962,337.
- The court of appeals held the commission clause was unambiguous, the procuring-cause jury instruction misstated the contract, and reversed and rendered judgment that Perthuis take nothing; cross-appeal for attorney’s fees failed because he did not prevail.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Employment Offer Letter required payment of commissions on post-termination sales (construction and jury charge) | Perthuis: commission entitlement includes sales he "procured" and survives termination (procuring-cause rule) | BMGL: commission was 3.5% of "net sales" as employee compensation and did not create post-termination obligations | The provision is unambiguous and tied to employment; trial court erred by instructing procuring-cause; reversed and rendered for BMGL |
| Whether the procuring-cause doctrine applies to this commission agreement | Perthuis: procuring-cause doctrine applies beyond real estate/analogous contexts to entitle him to commissions | BMGL: parties did not contract for procuring-cause commissions; courts cannot rewrite contracts | Procuring-cause rule not incorporated into the Offer Letter; not applicable here |
| Sufficiency of evidence that BMGL breached the commission agreement | Perthuis: his procurement caused later sales and thus BMGL breached by not paying commissions | BMGL: it paid commissions through his termination and had no contractual duty to pay thereafter | No evidence of breach under the written agreement; court rendered take-nothing judgment for BMGL |
| Entitlement to attorney’s fees under Tex. Civ. Prac. & Rem. Code ch. 38 | Perthuis: prevailing party on a claim for which fees are recoverable | BMGL: fees only recoverable by prevailing party | Perthuis is not prevailing; fee claim denied |
Key Cases Cited
- El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802 (Tex. 2012) (contract-construction principles; start with the written language)
- URI, Inc. v. Kleberg Cty., 543 S.W.3d 755 (Tex. 2018) (objective intent controls; extrinsic evidence limited when contract is unambiguous)
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (use plain, ordinary meanings for undefined contract terms)
- Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310 (Tex. 2005) (construe contracts utilitarianly in light of business purpose)
- Seger v. Yorkshire Ins. Co., Ltd., 503 S.W.3d 388 (Tex. 2016) (jury-charge definitions that misstate law reviewed de novo)
- Tenneco, Inc. v. Enterprise Prods. Co., 925 S.W.2d 640 (Tex. 1996) (courts may not rewrite contracts to insert terms not agreed upon)
- HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998) (same—courts cannot remake contracts)
- Bed, Bath & Beyond, Inc. v. Urista, 211 S.W.3d 753 (Tex. 2006) (incorrect jury instruction requires reversal if likely caused improper judgment)
- Green Int'l, Inc. v. Solis, 951 S.W.2d 384 (Tex. 1997) (attorney’s fees under Tex. Civ. Prac. & Rem. Code § 38.001 available only to prevailing party)