Sheaff Brock Investment Advisors, LLC v. David Morton
2014 Ind. App. LEXIS 143
| Ind. Ct. App. | 2014Background
- Morton began employment with Sheaff Brock on March 1, 2010 as an investment advisor representative with at-will status and an employment agreement.
- The agreement provided a guaranteed annual draw of $30,000 and additional compensation of 50% of net management fees in year one and 20% thereafter, with pro rata adjustments for fee changes.
- In 2011, Sheaff Brock restructured Morton’s additional compensation to 30% for the first year and 10% thereafter, temporarily increasing his guaranteed draw to $250,000 to aid transition.
- In November 2011, Morton was told he would have a territory covering one-third of the country and would receive 50% of net management fees in his first year and 20% thereafter for accounts in that territory.
- In early 2012, Morton expressed concerns about the company’s finances and was terminated; Morton sued for breach of contract, unpaid wages, and constructive fraud, among other claims.
- The trial court granted partial summary judgment: it found no breach for prospective changes to compensation but breach for applying changes to existing accounts, and it found additional compensation to be a wage under Indiana’s Wage Claims Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract on retrospective pay changes | Morton: vested rights in additional compensation for existing accounts; changes retroactive breach. | Sheaff Brock: agreement allowed prospective amendments; no vested right to current terms for existing accounts. | SB breached by applying changes to existing accounts |
| Whether additional compensation is a wage under the Wage Claims Act | Morton seeks wages due under the Act for earned compensation. | SB contends compensation is not a wage or is discretionary or not earned within ten days. | Yes, additional compensation is a wage under the Act |
| Constructive fraud claim | Morton contends SB misled with documentation and owed punitive damages. | SB argues claim duplicative of breach of contract; punitive damages not allowed absent independent tort. | Summary judgment for SB on constructive fraud |
| Appellate attorney’s fees | Morton seeks appellate fees if Wage Claims Act prevailing. | If Morton prevails on wage claim, he is entitled to appellate fees. | Morton entitled to appellate attorney’s fees |
Key Cases Cited
- Highhouse v. Midwest Orthopedic Institute, P.C., 807 N.E.2d 737 (Ind. 2004) (bonus as wage if not linked to employer's financial success)
- Wells Fargo Ins., Inc. v. Land, 932 N.E.2d 195 (Ind. Ct. App. 2010) (commission entitlement upon secured business; vesting and timing considerations)
- Vector Eng’r & Mfg. Corp. v. Pequet, 431 N.E.2d 503 (Ind. Ct. App. 1982) (commission-based pay may vest by contract or conduct)
- Tobin v. Ruman, 819 N.E.2d 78 (Ind. Ct. App. 2004) (breaches of contract rarely support punitive damages unless independent tort shown)
- Quezare v. Byrider Finance, Inc., 941 N.E.2d 510 (Ind. Ct. App. 2011) (discretionary vs mandatory compensation and wage characterization)