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Failla v. FixtureOne Corp.

Court of Appeals of Washington, Division 2

November 13, 2013

Kristine Failla, Respondent,
FixtureOne Corporation, Defendant, Kenneth A. Schutz, Appellant

Page 1006

Appeal from Pierce County Superior Court. Docket No: 11-2-13799-1. Date filed: 04/27/2012. Judge signing: Honorable Garold E Johnson.

Thomas H. Oldfield (of Oldfield & Helsdon PLLC ), for appellant.

Michael W. Johns (of Roberts Johns & Hemphill PLLC ), for respondent.

Authored by Thomas R. Bjorgen. Concurring: J. Robin Hunt, Joel Penoyar.


Page 1007

Bjorgen, J.

[177 Wn.App. 816] ¶ 1 Kenneth A. Schutz, president and chief executive officer of FixtureOne Corporation, appeals the denial of his motion to dismiss Kristine Failla's claims against him for unpaid wages and other relief and the granting of Failla's summary judgment motion on the same claims. Schutz argues that Washington State lacks personal jurisdiction over him because he does not have the requisite minimum contacts with the state; and, even if Washington did have personal jurisdiction, that summary judgment was inappropriate because genuine issues of material fact are present. Concluding that Washington lacks personal jurisdiction, we reverse the superior court's denial of Schutz's dismissal motion. Because Washington lacks jurisdiction, we also reverse the superior court's summary judgment in Failla's favor and the accompanying judgment and awards of prejudgment interest, attorney fees, and costs.


I. Remote Employment with Pennsylvania Corporation

¶ 2 FixtureOne is a Pennsylvania corporation headquartered in Philadelphia, specializing in the design and production of custom store fixtures and furnishings for the retail industry. Schutz was the president and chief executive officer of FixtureOne Corporation and had been an officer and director of the company between 2004 and 2011.

¶ 3 In October 2009 Failla e-mailed Schutz, seeking a sales position with FixtureOne that she could perform from her home near Seattle. Failla traveled to Pennsylvania for an interview with Schutz. Following the interview, Schutz offered Failla an account executive position with the company. The position required Failla to conduct her work via telephone, e-mail, and occasional airplane travel. Schutz told Failla that having a sales representative in her part of the country could be useful because he would like to do business with Starbucks. However, Failla did not pursue Starbucks or any other Washington company as a customer. [177 Wn.App. 817] Failla's compensation included $75,000 in annual salary and an additional three percent sales commission on new accounts.

¶ 4 At the end of 2010, Failla's first full year of employment with FixtureOne, she e-mailed Schutz, asking for an accounting of her sales commissions and payment of those commissions. Schutz instructed " Ed" [1] to identify and report Failla's 2010 sales commissions and to issue her a check. Clerk's Papers (CP) at 36.

¶ 5 Schutz promoted Failla to vice president for sales in 2011. He raised her base salary to $135,000 and continued her three percent sales commission, with the exception of one account. Additionally, Schutz informed Failla that she would need to sign the company's employment agreement, which, among other terms, provided that it " shall be interpreted in accordance with the laws of the Commonwealth of Pennsylvania." CP at 78. Failla responded that she would sign

Page 1008

and mail the agreement that day. Three days later, Failla sent a version of the agreement back to Schultz with proposed revisions. Neither Schutz nor Failla took further action on the agreement.

¶ 6 In early April, Failla sent Schutz another request for the accounting and payment of her 2010 commissions. Schutz replied, " If Ed does not calculate soon, I will do so." CP at 38. Shortly thereafter, Schutz calculated Failla's 2010 commissions as $21,025.06. He e-mailed that calculation to Ed with instructions that Ed send a check for that amount to Failla by overnight mail. Not having received payment in early May, Failla again asked Schutz about the situation. Schutz responded that he had instructed Ed to make the payment and that he would find out what happened.

¶ 7 In late May Schutz e-mailed Failla, informing her that FixtureOne could not execute its orders properly and [177 Wn.App. 818] needed to close. Schutz told Failla that the company needed to end her employment as of the next day, but he promised, " We will pay your commissions and expenses [as soon as possible] in the next several weeks as we complete operations." CP at 44.

¶ 8 In early June Failla again e-mailed Schutz, asking for her last payroll salary check, her expenses, her 2010 sales commissions, and for documentation for her 2011 commissions. Schultz responded, " I know that Ed cut a payroll check for you and I signed it--I assume it would have been sent overnight and will check on it. I will check the status of your expenses and calculate the 2011 commissions." CP at 46.

¶ 9 In late July Schutz e-mailed Failla, stating, " Legally we do not owe you any commissions as the amount owed was negated when Juicy cancelled $50,000 of [Jucy Couture JFK Terminal 7] ... . [We] would like to pay you a severance in an amount equal to what the commission would have been assuming we are in a financial position to do so, however right now we are not in a financial position to do so." CP at 50.

¶ 10 Through counsel, Failla sent a letter to Schutz demanding immediate payment. The letter informed Schutz that Washington subjected employers to liability for ...

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