JCB, INCORPORATED, doing business as Conveying & Power Transmission Solutions, Plaintiff-Appellant
THE HORSBURGH & SCOTT COMPANY, Defendant-Appellee
from the United States District Court for the Western
District of Texas
HAYNES, HO, and DUNCAN, Circuit Judges.
C. HO, CIRCUIT JUDGE.
Texas Sales Representative Act seems straightforward enough:
When a sales representative is entitled to a sales
commission, but the principal refuses to pay, the sales
representative can file suit and seek treble damages. As the
Act provides, a principal who fails to pay a commission is
liable for "three times the unpaid commission due the
sales representative," as well as for reasonable
attorney's fees and costs. Tex. Bus. & Com. Code
the Act into practice, however, presents questions that the
plain language of the Act does not appear to answer. At what
moment in time do we determine the amount of any "unpaid
commission due" that is subject to trebling? A number of
options are possible, none of which appear to be compelled by
the text. Do we assess treble damages at the moment the
commission is owed, if it is not paid immediately (or if it
is not paid within some reasonable grace period-and if so,
what grace period shall courts apply)? Or do we treble based
on any commissions owed at the time the suit is filed? Or do
we treble based on any commissions owed when the principal is
held liable for unpaid commissions? Or on yet some other
date? And does the Act award reasonable attorney's fees,
regardless of whether treble damages are also awarded?
questions of statutory interpretation are issues of first
impression that will undoubtedly affect many Texas sales
representatives and their principals. They are questions that
this court could answer today, to be sure. But an answer from
our court would only bind those future litigants whose
disputes fall within the diversity jurisdiction of a federal
court. To best serve the people of Texas, these questions
should be answered by the only court that can issue a
precedential ruling that will benefit all future litigants,
whether in state or federal court. Accordingly, we certify
two questions to the Supreme Court of Texas.
& Power Transmission Solutions ("CPTS") agreed
to act as an independent sales representative for the
Horsburgh & Scott Company, responsible for marketing and
securing sales of Horsburgh products. In return, CPTS earned
a commission on the orders it secured. The agreement between
the parties includes various provisions that govern the
calculation and timing of commission payments (for example,
commission payments are due "on approximately the 10th
of each month following the payment of a
parties later terminated the arrangement. In their
termination agreement, Horsburgh agreed that it would
"pay commissions to CPTS in a manner consistent with the
Agreement on sales from orders received by [Horsburgh] on or
before May 24, 2015." CPTS asserts that, pursuant to
this provision, Horsburgh owed about $280, 000 in
the approximately seventeen-month period that followed the
termination, Horsburgh made consistent commission payments
that were nevertheless indisputably untimely under the stated
terms of their agreement. Horsburgh admitted that it
consciously paid CPTS late, in part because it prioritized
other business expenses. The record does not reflect the
precise amounts that Horsburgh paid in an untimely fashion.
But the parties agree that (1) at least some commission
payments were untimely, and (2) Horsburgh eventually paid all
the commissions it owed, plus approximately 5% interest.
eventually sued in Texas state court for treble damages under
the Act, as well as for breach of contract and quantum
meruit. Horsburgh removed to federal court under diversity
jurisdiction. After CPTS sued, Horsburgh paid between $77,
000-$90, 000 to cover the remaining outstanding commissions
owed. The district court subsequently granted summary
judgment to Horsburgh, on the ground that Horsburgh no longer
owed CPTS any unpaid commissions. CPTS appeals only the
portion of the district court judgment denying relief under
parties disagree on whether Horsburgh's late commission
payments entitle CPTS to treble damages and attorney's
fees. The Act provides:
A principal who fails to comply with a provision of a
contract under Section 54.002 relating to payment of a
commission . . . is liable to the sales representative in a
civil action for: (1) three times the unpaid commission due
the sales representative; and (2) reasonable attorney's
fees and costs.
Tex. Bus. & Com. Code § 54.004. Neither party
disputes that the parties had a contract under § 54.002,
and that Horsburgh violated a contractual provision
"relat[ed] to a payment of a commission" by making
untimely payments. Id. § 54.004.
issue here is whether there are any "unpaid
commission[s] due." CPTS contends that it is entitled to
treble damages on all untimely commission payments. It
further argues that CPTS may recover attorney's fees
regardless of whether it recovers treble damages. Horsburgh
responds (and the district court agreed) that, once Horsburgh
paid all commissions (and CPTS accepted those late payments),
nothing was left "unpaid" or "due."
Horsburgh further asserts that, absent a treble damages
award, CPTS was likewise not entitled to attorney's fees.
face, the statute plainly contemplates that the existence of
unpaid commissions will result in treble damages. The statute
does not expressly state, however, which date the court
should use to determine the existence and amount of any
"unpaid commissions due," for purposes of trebling.
Do we treble any commission that was not paid immediately on
the day it was due under the contract (or perhaps after some
reasonable grace period had passed)? Do we treble any
commission left unpaid on the day the suit is filed? Do we
treble any commission unpaid on the day the principal is held
liable? Or do we use some other day?
case illustrates the significant difference that the answer
to these questions can make. If we were to treble every
commission payment that was not paid immediately at the
moment it was due, Horsburgh would be subject to treble
damages based on $280, 000 in unpaid commissions.
Alternatively, if we consider only what is due at the time
CPTS filed suit, we would treble as much as $90, 000 in
commissions unpaid at that time. Or we might look at the time
of judgment, after Horsburgh had paid all outstanding
commissions, potentially leaving nothing to treble. The plain
text of the Act does not provide an answer. Nor have we found
meaningful guidance from any Texas precedent.
addition, in the event that a plaintiff does not recover
treble damages, the parties dispute whether a plaintiff can
nevertheless seek reasonable attorney's fees. In other
statutory contexts, Texas courts have often concluded that a
plaintiff must secure a damages award in order to
additionally recover attorney's fees. But those decisions
typically rely on the text of the statute for guidance.
See, e.g., MBM Fin. Corp. v. Woodlands
Operating Co., L.P., 292 S.W.3d 660, 666 (Tex. 2009)
(attorney's fees "in addition to the amount of a
valid claim"); Gulf States Utilities Co. v.
Low, 79 S.W.3d 561, 567 (Tex. 2002) (attorney's fees
for "consumer[s] who prevail"); Sw. Bell Mobile
Sys., Inc. v. Franco, 971 S.W.2d 52, 55-56 (Tex. 1998)
(attorney's fees for ...