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American Bank and Trust Co., N.A. v. Leyden

Court of Appeals of Iowa

December 5, 2013

AMERICAN BANK AND TRUST COMPANY, N.A., Counterclaim Defendant-Appellee.

Appeal from the Iowa District Court for Scott County, Mary E. Howes, Judge.

Former bank employee appeals following a jury verdict in favor of the bank on his breach-of-contract counterclaim.

Bridget R. Penick of Dickinson, Mackaman, Tyler & Hagen, P.C., Des Moines, and Ari Karen and Stanley Todman of Offit Kurman, P.A., Maple Lawn, Maryland, for appellant.

Cameron A. Davidson and Jeffrey D. Wright of Pappas, Davidson, O'Connor & Fildes, P.C., Rock Island, Illinois, for appellee.

Heard by Doyle, P.J., and Tabor and Bower, JJ.


This case involves an employment dispute between American Bank and Trust Company (ABT) and Jeff Gennarelli, its former regional vice president. After Gennarelli quit his job, ABT sued for an alleged breach of restrictive covenants. Gennarelli filed a counterclaim, alleging ABT first breached the employment contract by failing to pay agreed-upon commissions. The district court denied Gennarelli's motion for partial summary judgment and a jury returned a verdict in favor of ABT.

Gennarelli now challenges the rejection of his counterclaims for breach of contract and fraud. First, he asserts the district court erred in denying his motion for partial summary judgment. Alternatively, he contends the jury's verdict was against the weight of the evidence. Second, Gennarelli claims the court abused its discretion in excluding evidence from other former employees who claimed ABT did not honor their compensation agreements. Third, he argues the court erred in granting ABT's motion for a directed verdict on his counterclaim for fraud. Fourth, he claims the court abused its discretion by allowing ABT's corporate designees to present inconsistent testimony.

Viewing the evidence in the light most favorable to ABT, we find substantial evidence to support the jury's verdict on the breach-of-contract counterclaim. On the second issue, we see no abuse of discretion in the court's exclusion of the other complaints. On the third issue, we conclude the district court properly granted a directed verdict on Gennarelli's fraud claim. The fourth claim was not properly preserved for our review. Accordingly, we affirm.

I. Background Facts and Proceedings

In October 2007, Brian Boyles, the president of ABT's mortgage division, hired Gennarelli to be the regional vice president for its Chicago markets. Boyles was Gennarelli's boss. Under his written employment agreement, Gennarelli was entitled to commissions based upon the monthly net revenue of ABT's Chicago markets and commissions based upon his personal production as a mortgage loan officer. The agreement defined the calculation for monthly net revenue. The agreement also stated any changes or modifications to the contract had to be in writing and signed by both parties.

ABT's Chicago mortgage division started turning a profit in December 2008. ABT paid Gennarelli monthly net revenue commissions of $131, 302.04 from December 2008 through November 2009. ABT contends that by November 2009 Gennarelli's compensation structure was changed "orally" with his assent. Specifically, his compensation "was changed to include a salary, personal production commission, and 7.5% of net income from Iowa and Illinois, including [ABT's] Iowa City and Quad Cities markets."

After the change to Gennarelli's compensation, he received monthly spreadsheets by e-mail from either Naomi Jones in payroll or Dale Dollenbacher, ABT's chief financial officer. ABT asserts "Gennarelli consistently responded by approving his own pay, despite the spreadsheets not including the monthly net revenue commissions" and not including "personal production commissions based on secondary gain-money."

"Secondary gain" refers to money from the sale of ABT's mortgage loans to buyers or investors on the secondary market. ABT retained some of its mortgages "in house" and sold some of its mortgage loans. ABT explains secondary gain is not realized from the closing of a loan but rather from the sale of the loan. Because Gennarelli did not sell ABT's loans on the secondary market, ABT asserts he did not "personally produce" the secondary loan gain. ABT also asserts Gennarelli was aware ABT was profiting from the secondary-market sales and despite this awareness, he sent Boyles a monthly e-mail with a spreadsheet containing the personal production commissions ABT owed him and "never included personal production commissions off the secondary gains."

While still working for ABT, Gennarelli began discussing employment opportunities with ABT competitor, Bridgeview Bank Mortgage Company (BBMC). On May 19, 2010, Gennarelli signed a transition agreement with BBMC stating that to the best of his knowledge there were "no actions, suits, proceedings, orders, investigations, or claims pending" or "threatened" against ABT. Gennarelli left his employment with ABT in June 2010.

In June 2010, ABT filed a petition alleging Gennarelli breached restrictive covenants in his employment agreement, breached his confidentiality agreement, breached the fiduciary duty he owed to ABT, and engaged in a civil conspiracy against ABT.[1] Gennarelli answered, alleging the affirmative defense that he was "excused from performing his obligations under his Employment Agreement" because ABT first materially breached the agreement by failing to pay him commissions. Gennarelli also filed a counterclaim alleging (1) ABT breached the employment agreement by failing to pay him the compensation he was entitled to receive (i.e., ABT did not pay a portion of the personal production commissions he earned and did not pay any of the monthly net revenue commissions), and (2) ABT's conduct constituted fraud (i.e., ABT misrepresented it would pay him under the contract terms but instead it "skimmed" funds from revenue used to calculate commissions).[2] Gennarelli asserted ABT owed him $57, 370.03.

Gennarelli sought partial summary judgment on his claim ABT breached the employment contract. The district court found genuine issues of material fact existed ...

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