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Albert J. Diaz v. Indian Head, Inc., a Corporation
686 F.2d 558
7th Cir.
1982
Check Treatment

*3 by selections the actual were made someone Lettvin, Mullin, Segal & Epton, Norman undisputed responsi- else. It is that Diaz’s 111., Druth, Chicago, plaintiff-appellant. for bilities did include solicitation of orders. Beck, 111., Chicago, for defend- Philip S. employment agreement A formal be- ant-appellee. signed tween Diaz and was not CUDAHY, PELL, and backdated, Before WOOD July, until 1973. It was how- Judges. ever, Circuit working the date began Diaz company. pre- The which was PELL, Judge. Circuit by attorney Indian re- pared Head's by concerns Diaz diversity case, expressed during Albert flected plaintiff, In this negotiation period, Diaz, Diaz’s title from the district court’s appeals J. recited and duties as It also out- on described above. dismissal of claim for commissions lined, paragraph three, em- the terms rele- completed after termination of his sales compensation to Diaz’s appeal on vant included ployment. principal The issues salary Paragraph properly in- commission. three judge are whether the below provided judicata and also the doctrine of res voked subject to revision the em- at the close correctly interpreted whether he year. parties as fiscal ployment contract between the barring Diaz’s claim. Paragraph provided four the contract that, days party, ninety by either notice

I. FACTS put part-time consulting Diaz could be on a months com- began employment eighteen “for a negotiating Diaz an basis (Indian Head, mencing upon Inc. the termination of Em- with Indian employment a full-time basis.” Head) ployee’s late Diaz then January, consulting were to be Register Corpo- part-time duties employed National Cash $1,000 per month (NCR). compensated contem- at a rate of ration Head was Indian arrangement. initiated the if Diaz micropub- acquisition of NCR’s plating Head, 1,900 during Catalogue acquired titles NCR Indian Diaz selected 1972-3 from 1. The 1,183 year employment with Brookhaven the 160 of his In contrast one included titles. Press, competitor. Indian Head’s Diaz his tenure with titles added A few Paragraph agreement provid- days conversation, five of the after this resigned position engage indirectly Head, with Indian ed that Diaz should not ef- May 10, 1974, fective accepted an offer directly competitive business with employment from Northern Engraving during the time he was Microcard Editions Company (Northern). employee or consultant to either a full-time Indian Head. Diaz received his monthly last commission statement from Indian Head on or about Despite fact June began Head then signed July, was not until paying the per consulting month fee March, began receiving commissions in provided paragraph for in five of the con- 1973. These commissions were based on tract. Diaz never cashed these consulting Catalogue made from the 1972-3 sales fee checks. included commissions on orders booked *4 August, 1974, In Diaz commenced suit in acquired Microcard Editions before it was federal district eighteen- court to have the by Indian Head. Diaz’s month noncompetition clause in the con usually on the net calculated basis of deliv- (Diaz tract declared I). unenforceable In ered and invoiced sales. Orders received order, reported its F.Supp. (N.D. 402 111 yet shipped generally but not were not in- Ill.1975), the district court held that cluded. clause was pre unenforceable insofar as it 1974, January, In Diaz received cluded Diaz’s competing with Indian Head $50,- a commission statement that included once his full-time employment with that completed 000 for sales not as of the end of company terminated. The judge district previous November. The month Diaz had also held that Diaz was not obligated to expressed some dissatisfaction with his em- perform any consulting services for Indian and, ployment arrangement in early Janu- Head. Diaz was ordered to return all the ary, had received an offer of consulting fee checks to Indian Head. competitor from a of Indian Head’s. Indian Indian appealed Head this order. Diaz Head characterized the commission cross-appealed ground on the that he should “goodwill gesture” as a indicative of the have been timely afforded notice and an company’s desire for Diaz to remain in its opportunity present to regarding evidence return of the September 2, checks. On 1975, this court Judge affirmed Decker’s 1974, January, Later in Diaz was told unpublished order in an order. stayed he with beyond if 1,1974, he probably put December would be 6, 1976, April On present Diaz filed the salary plus compensa- on a bonus scheme of (Diaz II), lawsuit seeking additional com- longer paid tion no pensation and would be on a for commissionable items selected Diaz, 1974, February, commission basis. Diaz the sale of which was consummat- ed after inquired termination of his employment about commission rate for the with Indian Head. The year. 1974 fiscal He was told that the rate commission claim falls categories. into two Diaz claims According would be lowered. to Indian $5,363.63 based on prior sales booked Head, made, to change pursuant this to 10, May 1974 but thereafter. He power reserved in the because also claims commissions on sales made from contemplated significant Head Indian in- catalogues 1973-4 and 1975 that were generated by crease in sales salesmen. The booked after he left Indian Head. Includ- definition of “net sales” in Diaz’s contract commissions, ing these latter Diaz claims a provide did not for salesmen’s commissions $105,186.59. total of to be deducted before commission was calculated. Had Diaz’s commission rate re- Appearing Flaum, Judge before Indian constant, might he well mained have re- May, Head moved to dismiss Diaz’s suit in company 1976, grounds ceived what viewed as an un- on the the action warranted windfall. res employ- barred and that the 562 in his earlier suit. The nation commissions its face demonstrated on ment issue, to additional is whether claim now not entitled Diaz was judge trial denied factual raised arises out of “same basic

compensation. 1976, December, finding that situation,” Na- Himel v. Continental Illinois motion separate and distinct Co., 205, on a was “based II tional Bank and Trust 596 F.2d to though it even (citation omitted), cause of action (7th 1979) relate[d] as did Cir. I],” and involved in the same [Diaz properly Diaz I have been raised and could upon claim had stated a that Diaz Accord, Gasbarra, suit. in the earlier “ granted.2 be relief could (the ‘the entire F. at 121 test is whether 2d due arises amount claimed to be Head moved to August, Indian ” out of one and the same act or contract.’ interest, party as the real join Northern (quoting Ernest Freeman & Co. v. Robert would be entitled arguing that Northern Co., Regan Ill.App. G. from Indian any recovery Diaz obtained (1947)). 517-18 N.E.2d this motion. Judge Flaum denied Head. Perry for reassigned Judge arguments against poses

Diaz II was three March, judicata. First, The trial was held trial. of res applicability plaintiff’s of the Indian At the close Judge rulings Flaum’s earlier claims that Rule pursuant dismissal moved for Head to Diaz II that Diaz I was not a bar consti- 41(b) Federal Rules of Proce- Civil case should not have tute the law the orally renewed its motion to dis- dure and Second, by Judge Perry. been disturbed ground judicata. res on the miss *5 urges that he have appellant could not regarding not renew its motion Head did post-termination brought his claim for com- Northern. missions the time of Diaz I at because Indi- ' liability impossible an Head’s was to calcu- 18, 1981, September Judge Perry dis- On late until after the trial of the first case He held Diaz’s action on merits. missed Third, concluded. Diaz contends that judicata by was barred res that the suit only presented issue in Diaz I was the valid- interest in the action that Diaz had no and, ity noncompetition clause4 would be the sole benefi- because Northern therefore, ciary any judgment against the issues raised the second Perry em- Judge Head.3 also held that the suit were not and could not have been liti- unambiguous ployment gated earlier. We will address each of any claim for commissions on sales barred these contentions in turn. departure after Diaz’s from Indi-

completed Judge rulings judi Flaum’s that res an Head. interlocutory cata does not bar Diaz II were and could and reviewed at be “reconsidered II. JUDICATA RES prior judgment.” time to final Pitt judicata “not The doctrine of res extends States, Corp. ston-Luzerne v. 86 United only actually matters to those determined 460, (citation F.Supp. (M.D.Pa.1949) prior proper- but also to matters in the omitted). As Professor Moore has ob ly which could have been raised in involved served: prior suit.” Gasbarra v. Park-Ohio In- Inc., by cannot its law of dustries, (7th Since a lower court 655 F.2d Cir. concedes, higher having appel- court 1981). appellee Diaz did the case bind a As the it, jurisdiction only over sensible litigate present post-termi- claim for late relating cross-appeal Judge 4. Diaz maintains that his denied a renewed motion 2. Flaum also consulting July arguing fee checks was to the return of the the same bases for dismissal and, only procedural grounds premised as a 1979. result, moneys Diaz I involved no claim for pursuant the contract. We do not owed urge Indian Head does not affirmance on this point; dispute find it we do not this and, ground we do not discuss it judi- dispositive res the doctrine of of whether disposition further in our of this case. applicable. cata is atory injunctive ... to do thing for a lower federal court relief or a deter- inviting is to set itself instead of liability mination of which would have above, reversal when convinced its been res in suits for future in- substantially erroneous. law of case stallments. 0.404[1], Practice IB Moore’s Federal H Id. at 123. (1982) (footnotes omitted). We think Further, the amount of commissions Diaz analysis applicable Professor Moore’s asserts he was due on completed sales dur- the situation in which one federal district ing fiscal 1974 was following determinable judge ruling believes of another district year close of that fiscal on November erroneous, judge Judge to be Perry did in 30,1974. Even if no final sales information Judge case. We do not think that was available until January, Perry foreclosed law of the case suggests, as Diaz hearing at which holding from that Diaz II was barred res Judge Decker ordered Diaz to return the judicata. consulting fee checks did not occur until Similarly, persuaded we are not March impossible it was for Diaz to raise the in

stant claim at the time of Diaz I because arguing present that the allegedly owing the amount was not then claim did not arise out of the same factual Gasbarra, certain. Like the I, situation as appellant relies on liability Diaz confuses the issues of and Himel v. Continental Illinois National Bank damages. 655 F.2d at 122-23. Plaintiff Co., (7th and Trust 1979). 596 F.2d 205 Cir. originally claiming Gasbarra had filed a suit Himel, the beneficiaries of a testamenta- bonuses, salary, entitlement fringe ry trust filed suit in 1972 charging the as a benefits result of trustee with mismanagement of the trust wrongful attempt and ineffective to termi estate (Himel and breach of fiduciary duty employment. nate his The trial court held II). earlier, years Eleven the beneficiaries in that case that the contract had not been had succeeded their suit to have the terminated and that Gasbarra was entitled investment clause of the trust instrument *6 salary to the accrued but not to bonuses or (Himel I). reformed. The district court fringe benefits. granted summary judgment for the trustee The contract between Gasbarra and in Himel II ground on the that Himel I was properly Park-Ohio was terminated follow- a bar to the second suit insofar as Himel II ing later, years suit. Three first Gas- related to investment prior decisions made again barra sued. He claimed noncontrac- to 1961. fringe benefits, tual the entitlement This court judgment below, reversed the which arose between the that, holding although both suits were di- first action and effective termination of rected poor performance trust, at the of the granted the contract. The district court they arose out “independent of factual situ- summary judgment for the defendant on alleged ations to be the cause of that ef- ground judicata. appeal, of res On fect,” id. at premised and were thus argued Gasbarra that he could not have different causes of action. The court noted sought these in benefits his first suit be- that, had the proved misman- beneficiaries cause his claim to had them accrued subse- agement in that fact would not quent judgment. to the have first This court grant affected the court’s grant summary affirmed the or denial judgment, of stating request that: for reformation. The court also question found that a of material fact exist- question of the liability

[T]he ed as to plaintiffs whether the in fringe for the the second clearly benefits had ac- crued suit had known ripe and was for decision or should have known in [at time of the first question alleged .... The 1961 of the earlier misconduct. Id. suit] by. could have been resolved either declar- at 210. provides support sound for our conclusion in distinguishable.from the II is

Himel Judge Perry properly I the instant case that focused on the trust present Himel suit. judicata a bar the court reformed found res to Diaz’s suit. and instrument itself further the testa the investment clause recognize, judi- We that the res providing of the max expressed intent tor’s cata in is a issue this case close one. We II, In Himel how possible. imum income ground therefore turn to an alternative re- ever, intent nor inter the testator’s neither upon by judge lied below: instrument pretation the trust was at relationship parties contractual between the contrast, Diaz I Diaz II By both issue. precludes Diaz’s claim. interpretation requiring involved issues further, parties; the contract between III. CONTRACTUAL RELATIONSHIP pertain post- to the the issues in both cases points preliminary Two must be relationship between First, by made. virtue of the contract be Gasbarra, any claim Indian Head. As parties, tween the law of New York post-termination might that Diaz have governs interpretation of the employment of which he should— commissions was one Second, agreement. recognize that be certainly been aware in could—have cause Indian Head drafted the employment fully 1974 and which had accrued at that agreement, ambiguities therein must be time. against construed Indian Head. Bank of Carolina, Bank, North N. A. v. Rock Island Although litigate did not (7th 1978). 570 F.2d Cir. This question post-termination relevant, however, canon of construction suit, apparently first on the advice only to the extent that contractual counsel, lan why there reason he could is no guage ambiguous. Further, itself Contrary appellant’s have be done so. significant cause Diaz had a amount suggestion argument purely that the of in at oral put sought into the final declaratory preclud in Diaz I the canon has relief commissions, a somewhat less relevance to this ed claim for such this court case than it recognized involving does to one previously has that: form contract which signed negotiation without between the equity have been law and unit- [W]here parties. present litigant ed and a can all his relief, grounds legal equi- whether judge The made findings below numerous inconsistent, table, hypo- alternative or why as to the contract barred Diaz’s claim. thetical, single in a cause of action he findings points urged relevant should have but one be held to cause of appellee fall logically into the following judgment action on the and final merits categories: (1) Diaz was not the “procuring matters, legal is res to all cause,” Khoury Brothers, Inc., Richer v. equitable, support and/or or defense of (7th 1965), F.2d Cir. of the sales for *7 that cause of action. commissions; (2) he claims the lan- Conrad, 1183, 1185(7th guage 536 F.2d Lambert v. the clearly contract bars the claim; 1976) (quoting (3) IB Cir. Moore’s Federal the extent of the executive Practice, 0.410, supra, 1156-57); at position see duties precludes involved in Diaz’s H also, claim; 10.405[7], plaintiff id. 764-65. The the (4) practical and the construction argued given in Lambert that res parties had the the evidences inapplicable was he sought only post-termination because no intent pay to Diaz com- injunctive relief in his first suit Although whereas he missions.5 there is some interre- damages lationship claimed in his second suit. This between these four categories, rejection argument court’s of Lambert’s shall discuss each turn. I, supra, relationship

5. As noted in Section time claims with Indian falling categories: apparent into two those Head. It is that if Diaz’s claim to shipped falling category related to sales booked but not as of within commissions fails, the first 10, 1974, May relating falling and those to sales both his claim to commissions within similarly category booked after he severed the his full- second cannot succeed. fully negotiated sale, the Procuring A. Cause court stated salesperson accomplished that “the pur- “procuring that he was the Diaz claims pose agency during of her the term of her all sales made cause” of employment, procured she buyer, ready, a during years fiscal 1974 and willing perform and able to according to the resulting commis- therefore entitled to the offer, salesperson terms of the and the holding in sions. He relies on this court’s procuring cause of the eventual sale.” Brothers, Inc., 341 F.2d 34 Khoury Richer v. Concerning 391 N.Y.S.2d at 939-40. Richer, (7th 1965). plaintiff’s In Cir. sale, Multiple Listing the court noted that job companies mail order was to induce services for which the broker earned “[t]he descriptions photographs of the insert performed the commission were all by the catalogues merchandise in their salesperson prior to termination. There- lists. The court held that and retail basic fore, salesperson had earned her share Richer was entitled to commissions on sales prior to termination.” Id. at 940. placed employment, after termination of his stating: Although the employed Bendevena court procuring cause,”

Plaintiff as the cause of the the term “procuring it recog- also sales, parties plaintiff under the nized that the “salesperson” was a ... is entitled to commissions notwith- and so characterized her repeatedly in its standing opinion. the sales were convinced, fact We are subsequent made or consummated that a New York court would necessarily plaintiff’s apply termination of the services. the procuring cause doctrine to one And, subject in view of the nature of the whose duties involved no direct sales effort. Richer, procuring matter here involved —the Even whose employment duties catalogue listings pro- analogous continuation of were more to those of Diaz than Bendevena’s, duce future sales the were was in a sense a “sales- catalogue is to serve and be current— man” in else, that he had to induce someone entirely it companies, makes reasonable the mail order carry descriptions express photographs absence of an cut-off limitation employer’s of his merchan- contrast, By on a commission basis de- dise. Diaz was involved in no pendent job on such future sales include com- direct solicitation. require His did not occurring persuasion missions on such sales subse- party third to act for the quent to termination of the salesman’s or benefit of Indian signifi- Head. It is also representative’s contract. cant that both Richer and per- Bendevena entirety formed the of the duties for which governed by Id. at 38. The Richer case was they they claimed commissions while Illinois law whereas the contract between respective Diaz, defendants’ is, terms, Diaz and Indian Head its own hand, compiled 1,183 on the other governed by New York law. titles contained in the catalogues while he asserts, however, that New York employed by NCR, adding only 160 recognized law also procuring has cause during his tenure with Indian Head. Diaz doctrine in Bendevena v. Richard Fuchs essentially asserting against claim Indi- Estate, Inc., Real 89 Misc.2d 391 N.Y. an performed Head work he while an (1976). S.2d employee so, doing NCR. he over- agent. was a real estate claimed two She looks the fact that Indian Head obtained fully commissions: one for a sale that was *8 1,183 part purchase list of titles as of its negotiated prior departure to her from the of Microcard Editions from NCR. employ, and one received relating property broker summary, to sale of a we are not convinced placed Multiple Listing she had with a Ser that Richer is consistent with New York working vice while she was for the defend law. Even if Richer and Bendevena were other, ant broker. The court found that Bendeve found to be consistent with each however, na was As distinguishable. entitled to both commissions. to Diaz’s claim is information, this ductory language provides those than less sales-related His duties Bendevena; further, pay Head is to indicating that Indian or Richer of either “[djuring period he claims commissions he is activity for the commission before he entered largely completed basis” and employed ... on a full-time relationship with the employment an into not “in default” of the contract. distinctions, light of these defendant. aspects the contract reinforce Other of that Diaz was not to think are inclined right Diaz’s to commis- conclusion that our for which of the sales “procuring cause” employment premised sion is on a full-time neces- It is not commissions. he now claims Paragraph relationship with Indian Head. question disposition on this our sary to rest right Head the gave three also characterization, Rich- because adjust eliminate—Diaz’s —or holding to the limited its specifically er year, fiscal so following the end of the 1973 provided no the contract in which situation long compensation did not as Diaz’s total limitation,” 341 F.2d at “express cut-off fact, level.6 In Ted Lee fall below a stated commissions. option and had had decided to exercise early Diaz in If Diaz so informed Language of Contract B. The all the commissions were to be awarded Paragraph three of seeks, he receive commissions for would Head Diaz and Indian agreement between the rate years fiscal 1974 and 1975 at both introductory portion of that is critical. The year fiscal 1973. The set in his contract for paragraph states: result that Diaz received far more would be employed by he is Indi- During period by quitting job than he in commissions basis, Indian Head on a full-time an Head have received had he remained in would long as as he shall not pay Employee, will Indian Head’s hereunder, following be in default compensation: Two other sections of contract also suggest that Diaz is not entitled to commis- added). 3(a) Subparagraph re- (emphasis sions on orders booked after he left Indian 3(b), Subparagraph salary. lates to paragraph Another section of three claim, Head. states: which Diaz bases compensation states that Diaz’s would (1) compensation, a sales As additional death; (2) (1) upon thirty days cease: monthly payable as earned at commission suspended after Indian Head him for $1,150,000 the first the rate of l8/4%of certain enumerated causes. This section each of Indian Head’s fiscal net sales in immediately portion follows the of the con- (as years Items here of Commissionable tract which defines defined) “commissionable after and a sales commission of items”; $1,150,000 in excess of we read the reference to 5% of the net sales year embracing “compensation” salary in each fiscal of Commissionable both Paragraph Items. four commissions. deline- post-employment rights obliga- ates the 3(b) Subparagraph cannot be read without parties. tions of the It makes no reference introductory language reference to to commissions. Each of these sections of Attempting ignores quoted to do so above. the contract is consistent with the introduc- paragraph. More im? the structure of the three, tory language paragraph quoted alone, 3(b), portantly, subparagraph read supra, right which limits Diaz’s to commis- pay the com- gives no indication who due, employ- sions to the of his full-time missions, they are or for what to whom they payable. are The intro- ment Indian Head. period of time suggests Lee had no and commissions will be We do not made].” 6. Diaz in his brief that anything provi- reevaluate his com- believe that in this contractual under the contract reconsidering early Lee’s rate in 1974 because the contract sion is inconsistent with mission something contemplated immedi- scheme over a stated that: “it is year. ately following the 1973 fiscal end of Indian Head’s 1973 month after the close of regarding salary year, reappraisal fiscal [such

567 clearly (1949), language of the contract did specifically The N.Y.S.2d 704 refer to date, shipping the as right suggesting that the predicates to commissions point right at which the This to commissions employee. a full-time being his Bearing ambigui- vested. in mind that any of Diaz’s entitled dispositive claim that he is ty in the contract must be in construed commis- total approximately to person claiming favor of the the commis- after he on orders that were booked sions sions, v. per Grattan Societa Azzioni Cotoni- bear left Head because these orders Indian Cantoni, 861, 2 ficio Misc.2d 151 N.Y.S.2d relationship to Diaz’s a “full- no status as 875, (Sup.Ct.1956), 884 the conclude that employee.” time the language employment agreement of be- language the Whether contractual tween Diaz and Indian Head suffi- is not concludes Diaz’s claim commis similarly to ciently specific as to when Diaz’s interest in booked tenure at sions on orders vested. language commissions The shipped depends but thereafter pre- does not clearly right on whether commissions to claim clude Diaz’s to commissions on sales booking time of the time vested at or at 10, May booked 1974 but before that, shipping. provides New York law of thereafter. contrary, clear absent a right to such at the commissions vests C. The Extent of Diaz’s Executive Duties booking. per time of Grattan v. Societa judge found, alia, district The inter Cantoni, 861, Azzioni 2 Misc.2d Cotonificio that the executive duties undertaken 875, (Sup.Ct.1956). 151 884 N.Y.S.2d his claim post-termination barred to argues that he is entitled to the New recognizes commissions. York law commissions because his contract with Indi employees that some paid are “substantially an Head is worded the same” part package of a total and Noening as the contract at issue in v. Bed performance consideration for of duties Mills, Inc., 618, ford 239 N.Y. 147 N.E. 220 in addition solicitation of orders. See (1925) curiam), Co., (per in which the court held Sommer v. Edward App. Ermold 275 629, plaintiff post-ter (1949). Div. 92 N.Y.S.2d 326 was entitled to In such a employee when the pertinent performing commissions. The lan ceases mination duties, right these to all Noening compensation, guage the contract stated commissions, including similarly ends. 92 plaintiff was entitled commis N.Y.S.2d at 327-28. “during the sions continuance of con 619, Id. at 147 We tract.” N.E. at 220. Sommer, plaintiff was the local disagree “during with Diaz’s assertion that manager sales company defendant the continuance of this is “sub contract” employed and was both to obtain orders and stantially the same” as “during the the servicing machinery attend to and employed ... on a full-time basis.” A parts manufactured defendant. force, can remain in if especially it denying post-termina- Sommer’s claim for post-employment rights obliga details commissions, tion the court stated: tions, the employee’s after full-time duties employed not as an [T]he employer Noening with the cease. is not salesman, ordinary but as the local sales persuasive support for Diaz’s claim. manager charge territory of a responsible for the servicing as well as Head-Diaz contract did selling the defendant’s machines provide, however, explicitly parts. plain- It is obvious that only to commissions vested when the discharge wrongful tiff’s not allegedly goods shipped. By contrast, con put to all opportunity an end servic- Estate, in In tracts at issue re Burnbrier’s ing product. of the defendant’s 653, aff’d, 654.(1949), App. N.Y.S.2d N.Y.S.2d (1950), Div. 97 N.Y.S.2d 710 Cuno Engineering Corp., O’Brien v. 87 N.Y. support Numerous facts trial aff’d, App.Div. 93 judge’s S.2d conclusion in this portion case that a *10 (1908), plaintiff sought the commissions on executive in nature duties were of Diaz’s that, department pay- for which there- accounts of than sales-related rather resigna- only ment was received after his fore, applicable. is rationale the Sommer Pub- tion. The court noted that President and title was “Vice “[w]hen [Orte- Diaz’s trial, began, he was entitled to his commis- ga] At the Editions.” lisher of Microcard receipts department on the total of his position as one re- sion described his plaintiff month, although much of it “executive and each some or performance the quiring Despite on that had come in before his managerial” duties and services. was business ended, informally referred he he was employment, fact that Diaz was and when appellant testi- picker,” drawing “title entitled to continue commis- to as the not by the actual selections made money subsequently fied that sions on received on persuasive is Perhaps during else. most employment.” someone business current only 160 new titles were added the fact Ill N.Y.S. during catalogues

to the Microcard acquired When Indian Head Micro- employment with Indian Head whereas NCR, card Editions from there were out 1,900 year of selected titles one standing undisputed It is that Diaz orders. with Press. employment Brookhaven commissions, pursuant received to his em for suggests that Diaz’s claim Sommer ployment agreement, these calculated on post-employment commissions is barred be- claims, however, orders. Diaz earned, large cause his commission was Ortega distinguisha cases are Sommer through duties that part, performance of ble because in those em both cases other day necessarily ended the he abandoned ployees companies of the defendant had employment relationship with In- full-time responsible initially booking been for rely court dian Head. The Sommer did contrast, By orders. Indian Head had no the nature the duties solely, instead, “previous” picker; title it was Diaz plaintiff in that case. performed by the compiled himself who had the title list from practical The court also looked to the con- which the orders were booked. As noted given by parties. struction the contract III(A), previously supra, in Section practical A similar examination of con- employed overlooks fact that he was not given the instant fur- struction compiled Indian Head at the time he thers that the rule our conclusion Sommer majority perti of the titles offered in the applicable this case. is catalogues. nent extremely narrow reading Ortega unjusti of Sommer and is D. Practical Construction of the Contract fied. Those examining courts were ascertaining right practical given when Sommer’s construction a contract vested, Supreme parties. the New York Both courts held that when an significant it employee Court found that the receives commissions on orders paid place, strong commissions under his contract on did not himself it is a indica company prior right orders obtained to the tion that the to commissions vests at shipped commencement of his the time the order rather than placed. were filled after he entered the defendant’s when it is We think that this anal Relying ysis applicable 92 N.Y.S.2d at 327. to the case at bar. fact, the Sommer court held that Concluding that Diaz’s to commis- practical given agree- construction shipment sions vested at the time of is also ment made clear “an intention that commis- consistent with the fact that his commis- payable goods only sions were due and generally shipped sions were calculated on plaintiff, while the was still in the only and invoiced orders. The occasion on employ.” Id. which-he received a commission in advance Similarly, shipment in an earlier York in January, New when his Ortega v. Collins New York Medical Insti- commission included for sales not tute, November, App.Div. completed 111 N.Y.S. 427 as of the end of exception Having duly from Indian arguments This Head’s normal considered all the *11 calculating by appellant, raised the practice of Diaz’s commissions hold that judgment of the shipped court below immediately dismissing orders followed Diaz’s cause hereby of action is upon expressing Diaz’s dissatisfaction with and, according to the de- Affirmed. testimony, represented goodwill fendant’s a gesture. CUDAHY, Judge, Circuit concurring in part dissenting in part. practical given

The construction the Diaz- by Indian contract parties Head indi- I do not believe that Diaz’s suit is barred right cates that Diaz’s by principles judicata. to commissions vest- of res In addition to and, shipment ed at the time determining of whether the claim in the in- stant pertaining properly contract bars his claim suit “could have been raised suit,” 562, in the earlier shipped May orders booked but not ante at I of believe the court must also ascertain whether the presented

claim here is such that one would normally expect litigant joined to have it IV. CONCLUSION presented with the claims prior in the suit. judicata The doctrine of res bars Diaz’s Wright, 18 Cooper, Cf. Miller & Federal suit because claims raised in both his Practice and Procedure at § 49-54 pertain first suit and the instant action to (1981) (analyzing concept judicata res post-employment relationship with Indi- merger principles under the governing the require interpreta- an Head. All the claims mandatory joinder claims). Diaz’s dam- employment agreement tion of the between age claim pass does not this test. could, should, parties. Diaz have agree I with majority that Diaz’s presses been of the claim he aware now employment contract give does not him the brought the time he his first suit. right to commissions on sales booked after Assuming, arguendo, that res is Diaz employment. terminated his But I inapplicable, present claim is barred would award Diaz commissions on sales employment agreement with the de- booked before he terminated his employ- fendant. His claim for commission on or- ment even though shipments did not following ders booked the termination of occur until after he left Indian Head. The employment relationship his full-time with is, majority concludes, as the also Indian Head is inconsistent with the clear ambiguous point. on this But bearing in language paragraph employ- three of the principle mind the recognized by major- agreement. ment ity “that because Indian Head drafted the employment agreement ex- employment agreement, any is not so ambiguities plicit as to whether Diaz’s to commis- therein must against be construed 564; booking ship- Head,” sions vested at the time of ante at see ante at I ping practice parties, interpret paragraph orders. The of the three of the contract to give indicate that Diaz’s interest does commissions earned on all booked only “[djuring in commissions vested when the orders sales em- [was] paid ployed Moreover, he was commis- at Indian because Head.” this interpretation be- supported sions Indian Head orders booked of the contract is. acquired payment Edi- fore the defendant Microcard of commissions in advance shipment (but practical booking) January tions. This construction of after parties’ together rely with the extent I would not on Indian Head’s duties, managerial brings explanation practice, namely the case of Diaz’s squarely adopted approach gratui- within the rule of this at bar Sommer Co., App.Div. tously placate give weight Diaz. I would v. Edward Ermold (1949), thereby barring practice contemporaneous as a con- N.Y.S.2d Hence, post-termination all commissions. struction of the contract. I would claim for damages for the amount of award earned, upon sales based Head’s time he left Indian at the

booked extent, respectfully dissent. I

To *12 NEUBAUER, al., et Plain- E.

Charlotte Cross-Appellants,

tiffs-Appellees,

v. CORP., FIBERGLAS

OWENS-CORNING Defendants-Appellants, al.,

et

Cross-Appellees,

v. CORP., al., et CORNING

PITTSBURGH Defendants-Appellants, Party Third

Cross-Appellees. and 81-1939 to 81-8033

Nos. 81-8021

to 81-1951. Appeals, Court of

United States Circuit.

Seventh

Argued Feb. 1982. Aug. 1982.

Decided Aug.

As Amended

Rehearing Sept. Denied Milwaukee, Wis., Goldberg,

Albert J. for plaintiffs-appellees, cross-appellants. Carlson, Milwaukee, Wis., Donald H. defendants-appellants, cross-appellees.

Case Details

Case Name: Albert J. Diaz v. Indian Head, Inc., a Corporation
Court Name: Court of Appeals for the Seventh Circuit
Date Published: Aug 13, 1982
Citation: 686 F.2d 558
Docket Number: 81-2692
Court Abbreviation: 7th Cir.
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