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Meschino v. Frazier Industrial Co.

United States District Court, D. Massachusetts

August 1, 2016

JOHN MESCHINO,
v.
FRAZIER INDUSTRIAL COMPANY,

          MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

          Richard G. Stearns UNITED STATES DISTRICT JUDGE

         In January of 2015, John Meschino sued his employer, Frazier Industrial Company, in Suffolk Superior Court, to recover allegedly late-paid and unpaid sales commissions. Meschino claimed violations of the Massachusetts Wage Act, Gen. Laws. ch. 149, § 148 (Count I); breach of contract (Count II); and unjust enrichment (Count III). Frazier terminated Meschino in July of 2015, precipitating additional claims for tortious interference with advantageous business relationships (Count V), and retaliatory termination in violation of Mass. Gen. Laws. ch. 149, § 148A (Count IV). (The tortious interference claim has since been withdrawn). Frazier removed the case to this court in February of 2015, based on diversity of citizenship. See 28 U.S.C. § 1332. Before the court are cross-motions for summary judgment. Oral argument on the motions was heard on July 6, 2016.

         BACKGROUND

         Frazier manufactures and sells structural steel storage rack systems. It owns manufacturing facilities and sales offices throughout the United States. Meschino served as Frazier’s New England District Sales Manager from July of 2005 to July of 2015. His employment was at-will. Frazier is headquartered in New Jersey, while Meschino worked from his home in Hull, Massachusetts. Meschino signed his original Employment Agreement with Frazier in July of 2005, and signed an updated Agreement in October of 2012. See Oliver Aff. (Dkt. #117, Exs. A, B).

         Meschino’s Agreement exhorted him to “operate as a small company” and promised that “[f]or sales up to $5 Million a commission on gross profit of 10% will be paid.” Pl.’s Statement of Facts (PSOF) (Dkt. #120, Ex. 1 at 1, 2). The percentage paid in commissions would rise commensurate with increases in gross sales as follows.

Sales up to and including:

Commission % Paid

$5, 000, 000

10%

$10, 000, 000

11%

$15, 000, 000

12%

> $15, 000, 000

13%

Id. at 2. The Agreement stated that the “[c]ommission for project managed jobs will be calculated at the transmitted margin and adjusted for the final budgeted margin when it is available. For jobs approved [by Meschino’s supervisors] with margins under 10% . . . ¼ of 1% of the total sell will be paid as a commission.” Id. Frazier provided Meschino with quarterly commission “[s]napshot[s]” that forecast his potential earnings. Id. The parties dispute the reliability of these snapshots.

         According to the Agreement, commission payments would vest as follows.

Commission on a quarters’ jobs will be first eligible to be paid at the latest by 4½ months after the quarter the sale is booked, ([f]or example: 1st quarter jobs will first be eligible for payment by no later than August 15th.) Fifty percent (50%) of the commission as calculated in the quarter booked will be paid when a job is 50% or more paid by the customer. When the job is paid in full the entire commission will be paid. Any jobs not paid in full when the 1st eligible quarter for commission payment has passed while [sic] remain as an eligible commission in the following quarter until the job has passed 50% or 100% paid.

Id. The Agreement finally stipulated that “[i]n the event of an error clearly attributable to the salesman, the company reserves the right to recover by deduction up to 25% of the cost caused by the error.” Id. at 3.

         In 2014, Frazier encountered severe difficulties and delays with contracts sold by Meschino to Fresenius Medical Care (Fresenius) and Maines Paper & Food Service (Maines). As might be expected, the parties’ explanations for the discord diametrically differ. Meschino claims that he sold a racking system to Fresenius that later proved technically faulty. Frazier’s management then switched third-party providers, delaying completion of a perfected system and forcing Fresenius to incur substantial storage costs. Frazier complains that Meschino should have investigated the problems with the racking system before finalizing the sale. Additionally, Frazier accuses Meschino of warranting the seismic safety of the racking system to Fresenius when he should have known that it was not compliant with California’s Seismic Code. Because of the potential exposure to massive earthquake liability, Frazier was forced to redesign the project. Meschino insists that he never made any such guarantee and that Frazier had agreed to excuse him from any liability for the costs of the redesign.

         With respect to the Maines projects, Frazier contends that Meschino failed to obtain waivers from Maines stipulating that Frazier would not be responsible for the work of third parties. Frazier then suspended work until the waivers were signed. The delay forced Frazier to rush the job to an imperfect finish, leaving Maines dissatisfied with the final product. Meschino asserts that waivers were rarely obtained from customers before on-site work began.

         In July of 2014, Carlos Oliver, the President of Frazier, emailed Meschino to tell him that he would not be paid commissions on the Fresenius or Maines contracts and “[would] also be held financially responsible for costs incurred per [his] contract.” PSOF, Ex. 6. As justification, Frazier points to back charges and repair costs on both jobs that it alleges resulted in “extraordinary losses.” Def.’s Mem. at 5 (Dkt. #118). In May of 2015, Frazier reported losses of $107, 324.91 on the Maines projects and $88, 190.52 on the Fresenius projects, totaled $195, 515.43. See PSOF, Ex. 9. After two subsequent revisions in December of 2015 and January of 2016, those alleged losses totaled $392, 787.96. See id., Ex. 22. Frazier estimates that the losses resulted in negative profit margins of -4.38% on the Maines projects and -10.81% on the Fresenius projects. Def.’s Mem. at 2.

         Because Meschino was not awarded commissions on the Maines and Fresenius contracts, Frazier deducted the losses from commissions Meschino had earned on other sales. Frazier explained its calculations of Meschino’s commissions earned and the deductions taken during the calendar year 2014 in a chart produced during litigation. See FRAZ000111 (dated May 28, 2015). Combining Frazier’s figures with those set out by Meschino in his Statement of Facts, results in the following chart.

Quarter/ Year

Latest Date First Eligible

Date Paid[1]

Commissions Earned

Commissions Withheld

Commissions Paid

Q1 2014

08/15/14

08/14/14

$62, 751.72

$38, 549.65

$24, 202.07

Q2 2014

11/15/14

11/26/14

$57, 327.93

$27, 500.00

$29, 827.93

Q3 2014

02/15/15

02/13/15

$23, 888.37

($16, 846.65)

$40, 735.02

Q4 2014

05/15/15

05/18/15

$19, 197.40

($324.14)

$19, 521.54

Total

$163, 165.42

$48, 878.86

$114, 286.56


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