Goodwin v. Johnson Controls, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 24-cv-00989-RMR-TPO
WILL GOODWIN,
Plaintiff,
v.
JOHNSON CONROLS, INC.,
Defendants.
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Timothy P. O’Hara, United States Magistrate Judge.
This case is before the Court pursuant to an order issued by District Judge Regina M.
Rodriguez referring Defendants’ Motion to Dismiss [ECF 9] for a Report and Recommendation.
See ECFs 21 & 24.1 Plaintiff filed a Response to the Motion to Dismiss [ECF 11], and the
Defendant filed a Reply [ECF 12]. In forming the present Recommendation, the Court has taken
judicial notice of the Court’s file and considered the applicable federal and state statutes and
relevant case law.
BACKGROUND FACTS
Mr. Will Goodwin, Plaintiff, was2 an employee of Defendant, Johnson Controls, Inc.,
1 This case originally was referred to Magistrate Judge Susan Prose. See ECF 21. The matter was
reassigned to this Court on October 15, 2024. See ECF 24.
2 As of March 20, 2024, Plaintiff was employed by Defendant. See ECF 4 at p. 2. It is unknown
whether Plaintiff remains employed by Defendant as of the time of this Recommendation.
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working as an Account Executive. See ECF 4 at p. 2. He began his employment on or about June
27, 2016. He sells Heating/Ventilation/Air Conditioning equipment throughout Colorado. See id.
Since he started working for Defendant, Plaintiff’s employment has included some type
of “incentive plan,” where, as a commission in addition to his salary, Plaintiff is paid a portion of
Defendant’s profit margin on sales made by him. See ECF 4 at p. 2. Under this arrangement,
Plaintiff typically receives approximately 10-11%3 of the profit margin earned by Defendant. See
id. Prior to November of 2023, the commission was paid out to Plaintiff in stages. Between 20-
25% of the commission was paid after closing the contract. See id. The remainder of the
commission (termed “accrued backlog”) was paid out over the course of the project, with the
final payment to be made to Plaintiff upon completion of the project. See id. at pp. 2-3. Plaintiff
estimates that the amount of “accrued backlog” he earned based on sales he completed before
October 1, 2023, is approximately $156,673.12. See id. at p. 4.
According to Plaintiff, on November 1, 2023, Defendant changed the structure of its
incentive plan completely. All sales post-October 1, 2023, were subject to this new incentive
plan.4 Importantly, though, in announcing the new incentive plan, Defendant represented that
“‘[s]ales booked prior to October 1, 2023, which have not reached the required milestones for
commission eligibility are not earned or due for payment.’”5 ECF 4 at p. 4. According to
Plaintiff, the new plan “effectively wipes out the remaining backlog and commission owed to
Mr. Goodwin.” Id. As a consolation prize, Defendant allowed a one-time “bridge payment” to
3 Plaintiff’s Complaint alleges that Plaintiff expects to receive “between 10.11% of the profit
margin on that sale as commission.” ECF 4 at p. 2.
4 Plaintiff does not claim that Defendant failed to pay a commission for any sales under the new
plan.
5 It is not clear from where Plaintiff gleaned this statement by the Defendant.
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Plaintiff “to transition him into the new 2024 Incentive Plan.” Id. The bridge payment was 22%
of the current backlog, or approximately $35,000. Defendant also added a non-competition
clause to Plaintiff’s conditions of employment. See id.
On March 20, 2024, while still employed with Defendant, Plaintiff filed this lawsuit,
originally in Arapahoe County District Court. See id. at p. 1. Plaintiff alleged four causes of
action based on: 1) a violation of the Colorado Wage Act, C.R.S. §8-4-101, et seq., 2) Breach of
Contract, 3) Unjust Enrichment, and 4) Breach of the Implied Duty of Good Faith and Fair
Dealing. See ECF 4. Because of the diversity of citizenship, and pursuant to 28 U.S.C. §§ 1332,
1441, and 1446, Defendant removed the matter to federal court. See ECF 1.
SUMMARY OF DEFENDANT’S POSITION
On April 19, 2024, Defendant filed its “Motion to Dismiss Plaintiff’s Complaint,”
moving to dismiss each one of Plaintiff’s claims. See ECF 9. Defendant first argues that
Plaintiff’s claim under the Colorado Wage Act fails because Plaintiff cannot demonstrate that the
commissions were “earned, vested, and determinable,” as required by law. See id. at pp. 10-12.
Defendant cites to a number of cases for support, including Lawson v. Heartland Payment
Systems, LLC, 548 F. Supp. 3d 1085, 1091 (D. Colo. 2020) (citation omitted).
Conceding that a contract existed between the parties for purposes of its Motion,
Defendant asserts that Plaintiff’s Breach of Contract claim should be dismissed because it fully
performed its obligations under the contract. See id. at p. 12. Since all of the requisite conditions
upon which full payment was premised had not been met, “[Defendant] had no obligation to pay
the commissions.”6 Id. Similarly, Defendant argues that Plaintiff’s remaining claims should be
6 Defendant does not dispute, and the incentive plans support, that it was required to pay portion
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dismissed because its failure to pay Plaintiff the accrued backlog was contemplated by the
explicit terms of the parties’ contract. See id. at pp. 12-15.
In support of its Motion, Defendant submitted Exhibit B, the Declaration of Aubrey
Kallenberger. See ECF 9-2. Ms. Kallenberger is a Senior Consultant with Defendant who “has
knowledge of the different incentive plans applicable to the Plaintiff during the relevant period.”
See id. at p. 1. Defendant also attached redacted and unredacted sales incentive plans for fiscal
years 2022, 2023, and 2024. See id. at pp. 5-91; see also ECF 23. The incentive plans confirm
the general payment structure described by Plaintiff for fiscal years 2022 and 2023. Defendant
notes specific language from portions of the 2022 and 2023 incentive plans, including the
following provisions:
1) 	“Please note that the Company is paying incentive, in some instances, prior to when
the incentive is earned. Incentive on a contract is not actually earned until transfer and
reconciliation.” Id. at p. 28 & 67.
2) 	“Management has the right to amend, modify, or terminate the plan at the company’s
discretion with or without notice to the participants, and without consultation.” Id. at
pp. 38 & 77.
Defendant also notes the new incentive plan for fiscal year 2024 “modified and redesigned the
commission payment framework for Plaintiff and others employees [sic] selling commission-
eligible products for JCI.” ECF 9 at p. 7. Defendant cites to a similar provision in the 2024
incentive plan that allows JCI to unilaterally reserve “the right to terminate or amend these terms
and conditions including Sales Incentive Program eligibility, Incentive Targets, and individual
employee payments at any time as and when JCI deems it appropriate without prior notice where
of the commissions to Plaintiff “up front.” See ECF 9-2 at p. 12. The disputed portion of the
commission is that which is labeled by Plaintiff as the “accrued backlog.”
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applicable by law.” ECF 9-2 at p. 4. Defendant admits that the incentive plan for fiscal year 2024
“does not contain any language that would entitle Plaintiff to the payment of any unearned
incentive that might (or might not) have turned into an ‘earned’ incentive under the Pre-2024
Plans after they expired,” thus relieving it from any obligation to pay the accrued backlog
payments that were pending when the new plan went into effect. See ECF 9 at p. 7.
PLAINTIFF’S POSITION
Plaintiff responds that he has sufficiently pled facts to substantiate all of his claims. See
ECF 11. As it relates to the first claim, he argues that he demonstrated that his wages were
“earned, vested, and determinable.” See ECF 11 at pp. 7-8 (referencing ECF 4 at ¶7); see also
Johnson v. Greenfield Holdings, LLC, 2023 WL 3437372 (D. Colo. 2023). He notes that
Colorado law includes as wages “commission earned for labor or services performed in
accordance with the terms of any agreement between employer and employee.” See id. at p. 6
(citing C.R.S. §8-4-101(14)(a)(II)). He points to the historical actions of Defendant in paying out
a portion of the commission shortly after the Plaintiff closed a contract as evidence of the earned
and vested nature of the commissions. See id. at p. 8 (referencing ECF 4 at ¶7). He also
references the practice between him and his employer after he receives the initial payment:
Defendant “would then pay the remaining amount of Mr. Goodwin’s commission (termed
‘backlog’) as the operations team completed the project, and the client paid Johnson Controls for
services rendered.” Id. at p. 8 (referencing ECF 4 at ¶8). As an alternative reason to deny the
Defendant’s Motion on the Colorado Wage Act claim, Plaintiff cites Colorado’s strong public
policy disfavoring clauses in employment contracts that cause employees to forfeit earned
commissions. See ECF 11 at pp. 9-10.
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Additionally, Plaintiff argues that he has pled the remaining claims sufficiently. See ECF
11 at pp. 10-13. He points to the terms of the incentive plans, and Defendant’s agreement to
compensate him in part for closing contracts, as proof of the Breach of Contract Claim. See id. at
p. 11. He also notes the inconsistent argument of the Defendant in using the existence of a
contract as it relates to the Breach of Contract Claim as a basis to deny liability on the Unjust
Enrichment Claim, one that is clearly pled in the alternative. See id. at p. 11. And Plaintiff
reasons that the Unjust Enrichment Claim was pled sufficiently because the parties’ contract
contains a one-sided escape clause that allows Defendant to “void the incentive agreement at any
time., [sic] without any agreement or input from Mr. Goodwin.” Id. Finally, Plaintiff argues that
he provided sufficient factual support for a Breach of Duty of Good Faith and Fair Dealing by
Defendant due in large part to its retroactive erasure of commissions earned by Plaintiff. See id.
at p. 12.
LEGAL STANDARDS
I. 	Fed. R. Civ. P. 12(b)(6)
A court’s role in addressing a motion to dismiss for failure to state a claim under Rule
12(b)(6) is to “determine whether the complaint sufficiently alleges facts supporting all the
elements necessary to establish an entitlement to relief under the legal theory proposed.” Forest
Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007). In doing so, the court “must accept
all the well-pleaded allegations of the complaint as true and must construe them in the light most
favorable to the plaintiff.” Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007)
(internal quotation marks omitted). “The burden is on the plaintiff to frame a ‘complaint with
enough factual matter (taken as true) to suggest’ that he or she is entitled to relief.” Robbins v.
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Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)). “Factual allegations must be enough to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555. “Mere ‘labels and conclusions’ and ‘a formulaic
recitation of the elements of a cause of action’ will not suffice.” Khalik v. United Air Lines, 671
F.3d 1188, 1191 (10th Cir. 2012) (quoting Twombly, 550 U.S. at 555). A court will “disregard
conclusory statements and look only to whether the remaining, factual allegations plausibly
suggest the defendant is liable.” Id. At this stage, the well-pleaded facts underlying a plaintiff’s
allegations must articulate a viable legal claim. See Ashcroft v. Iqbal, 556 U.S. 662, 678; Twombly,
550 U.S. at 555. The Complaint must contain “‘enough facts to state a claim to relief that is
plausible on its face.’” Johnson, 2023 WL 3437372 at *1 (citing Ridge at Red Hawk, LLC, v.
Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007)).
When construing a Colorado state statute, “courts ascertain and give effect to the intent of
the Colorado General Assembly and refrain from rendering judgments inconsistent with that
intent.” Kouzmanoff v. Unum Life Ins. Co. of Amer., 374 F. Supp. 3d 1076, 1087 (D. Colo. 2019)
(citing Walker v. People, 932 P.2d 303, 309 (Colo. 1997); Farmers Ins. Exch. V. Bill Boom, Inc.,
961 P.2d 465, 469 (Colo. 1998)). In 2003, the General Assembly changed the definition of
"compensation or wages” in C.R.S. §8-4-101(14) to include the requirements of “earned,”
“vested,” and “determinable.” Id. That change “signals the General Assembly’s aversion to
employees relying on indefinite, possible remittances.” Id.
II. 	Consideration of Information Outside the Complaint
While consideration of a Rule 12(b)(6) motion is generally limited to the four corners of
the Complaint, there are three exceptions. First, “attached exhibits and documents incorporated
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into the complaint by reference” may be considered. See Denver Health & Hosp. Auth. v. Beverage
Distribs. Co., 843 F. Supp. 2d 1171, 1177 (D. Colo. Feb. 8, 2012) (quoting Smith v. United States,
561 F.3d 1090, 1098 (10th Cir. 2009)) (internal quotation marks omitted). Second, the Court may
take judicial notice of information, “such as certain documents contained in the public record.” See
Sweesy v. Sun Life Assur. Co. of Canada, 643 F. App'x 785, 789 (10th Cir. 2016) (unpublished)
(citing In re Gold Res. Corp. Sec. Litig., 776 F.3d 1103, 1108 (10th Cir. 2015); Binford v. United
States, 436 F.3d 1252, 1256 n. 7 (10th Cir. 2006)). Third, the Court may consider documents if
those documents are “central to the plaintiff's claim and the parties do not dispute the documents’
authenticity.” Alvarado 	v. 	KOB-TV, 	L.L.C., 	493 	F.3d 	1210, 	1215 	(10th 	Cir.
2007) (quoting Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002)) (internal
quotation marks omitted).
In Plaintiff’s Complaint, he referenced both a “pre-November Incentive Plan” [ECF 4 at p.
5] and a “new 2024 Incentive Plan” [ECF 4 at p. 4]. Attached to its Response, Defendant submitted
redacted versions of its Incentive Plans for FY 2022, 2023, and 2024. See ECF 9-2. Pursuant to a
Protective Order, Defendant later submitted unredacted versions of those same Incentive Plans.
See ECF 23. In his Response, Plaintiff did not object to the authenticity of the incentive plans
submitted by Defendant and stated that “the entirety of each plan should be submitted.” See ECF
11 at p. 1. As a result, since the documents are “central to the Plaintiff’s claim,” and their
authenticity is not questioned by either party, the Court will consider this additional information
in forming its Recommendation.
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DISCUSSION
I. 	COLORADO WAGE ACT CLAIM
To survive a Motion to Dismiss for a Colorado Wage Act claim, Plaintiff’s complaint must
plausibly allege that his commissions were “earned, vested, and determinable.” See C.R.S. §8-4-
109(3)(b); see also Johnson, 2023 WL 3437372 at *3. If he has so alleged, then the commissions
are considered wages and he has an “enforceable right to receive payment for such benefits.” See
Johnson, 2023 WL 3437372 at *3. When interpreting a state statute, like the one at issue here,
courts “give effect to the intent of the Colorado General Assembly and refrain from rendering
judgments inconsistent with that intent.” Kouzmanoff, 374 F.Supp. 3d at 1087 (citing Walker v.
People, 932 P.2d 303, 309 (Colo. 1997).
The dispute between the parties is a mixed question of fact and law that demonstrates that the
claim should survive a motion to dismiss. The motion to dismiss is not the time to resolve a
factual and legal dispute like the one presented here. See Moore v. Roberts, 2017 WL 1906953,
*9 (D. Colo. April 17, 2017).
As a threshold matter, this Court finds that the Plaintiff has plausibly alleged that his
commissions were wages under the Colorado Wage Act. The relevant statute allows
commissions to be considered as wages. See C.R.S. § 8-4-101(14)(a)(II) (“wages” means
“[b]onuses or commissions earned for labor or services performed in accordance with the terms
of the agreement between an employer and employee.”) And although the parties dispute the
application and/or implications of the various Incentive Plans, especially considering the
November 2023 Incentive Plan and its retroactive nature, neither party disputes that a
commission-based incentive plan was contemplated by the parties during the relevant portions of
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Plaintiff’s employment.
Next, the Court analyzes the three-part definition to determine whether the outstanding
portion of these particular commissions should be considered as covered compensation under the
Colorado Wage Claim Act. First, the Court finds that Plaintiff has sufficiently pled that the
remaining portion of commissions was “earned.” See ECF 4 at ¶13 (Defendant denied Plaintiff
his “earned, due, and owing commission.”) More specifically, Plaintiff alleged that he had
“accrued backlogs” totaling approximately $156,673.12 that were “built through his own hard
work.” Id. at ¶16. Those backlogs were the result of commissions for “jobs he sold that were in
the process of installation.” ECF 11 at p. 2. In its Motion or Reply, the Defendant never disputes
that Mr. Goodwin made such sales or that the initial portion of the commission was, in fact, paid
by Defendant. See Docs. 9 & 12. Accordingly, Plaintiff has alleged that the commissions were
earned.
Second, Plaintiff has sufficiently pled that the commissions are “determinable.” According to
the Complaint, and as confirmed by the incentive plans themselves, prior to November of 2023,
Plaintiff was under an incentive plan as an employee of Defendant that allowed him to receive
between 10-11% of the profit margin on the sale as a commission. See ECF 4 at ¶7. He would
receive approximately 20-25% of the commission after closing the contract and then the
remainder “as the operations team completed the project.” See id. at ¶8. Plaintiff estimated that
he is entitled to $156,673.12 based on the compensation structure described herein for the period
between 2021-23. See id. at ¶16.
Defendant, on the other hand, argues that the commissions were not “determinable.” See
ECF 9 at p. 2; see also ECF 12 at p. 1. However, Defendant’s own exhibit demonstrates that the
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commissions were “determinable.” See ECF 23 at p. 12 & 48. No matter whether it is a “Secured
Volume” transaction or a “Executed Margin” transaction, the Incentive Plans for both fiscal
years 2022 and 2023 reflect that a portion of the incentives were to be paid “up front” and then a
subsequent portion was to be paid later. See id. All of this information supports Plaintiff’s
contention that the amounts of the commissions were (and are) determinable.
Several cases support the Court’s conclusion. In Rohr v. Ted Neiter Motor Co., Plaintiff’s
commissions for selling cars were considered wages. See 758 P.2d 186, 188 (Colo. App. 1988).
Because the parties’ agreement based plaintiff’s compensation on his sales specifically, in
contrast to a complex, profit-sharing plan that applied to the entire department, the commissions
were wages. On the other hand, in Kouzmanoff, plaintiff’s vague, short-term disability benefits
were deemed to fall outside of the meaning of wages because they were “not tethered to any
concurrent work performed.” 374 F.Supp. 3d at 1089. Here, Plaintiff’s commissions are much
more like the wages in Rohr than the non-wages in Kouzmanoff.
The Defendant’s real issue lies in whether Plaintiff sufficiently pled that the commissions
have “vested.” Plaintiff claimed that they have. See ECF 4 at ¶13. After all, according to his
Complaint, he received a payment of approximately 20-25% of the commission “shortly after
closing the contract.” See id. at ¶8. That alone is likely to be sufficient at this stage of the
proceedings to demonstrate the vested nature of the commissions. But Plaintiff went further in
the Complaint, alleging that the remaining owed amounts also vested because Defendant
indicated that “it was going to continue to service the contracts and projects that Mr. Goodwin . .
. procured, and accept payment from its customers for the . . . backlog[s] that are owed . . .” Id. at
¶10. Plaintiff confirmed that Defendant is subsequently receiving payment for these accounts,
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payment that would trigger a commission payment for him under the two earlier Incentive Plans.
See ECF 11 at p. 3 (“These are projects which Defendant was continuing to work, billing their
customer and accepting payment per the contract, which were [sic] procured and secured by Mr.
Goodwin for Defendant’s benefit.”)
Defendant responded with two arguments. First, Defendant disputed that the Plaintiff’s
commissions constituted wages because the incentive plans specifically informed Plaintiff that
such commissions were “unearned,” thus not “vested.” See ECF 9 at p. 10 (citing Exhibit B at
¶¶7, 8). Second, Defendant retained the exclusive right to amend the terms of the Incentive Plan,
including to cancel accrued backlogs, a right it exercised when it changed the Incentive Plan in
November of 2023. Therefore, any claim that Plaintiff had to the accrued backlog payments was
removed, and with it, any claim that the commissions were “vested.” See id. at p. 11.
Defendant’s arguments have some support. For example, in Lawson, Chief District Judge
Philip A. Brimmer granted the Defendant’s partial Motion to Dismiss in a wage dispute case,
finding that the plaintiff salesperson’s residual commissions were not wages under the Colorado
Wage Claims Act. See 548 F.Supp. 3d at 1094. There, though, the claimed compensation was
much more speculative, as the plaintiff was fired before any contract was signed, before any
installation of the product had occurred, and before any portion of the commission had been
made to the plaintiff. See id. In Geras v. International Business Machines Corp., the employer
included a similar disclaimer in the Incentive Plan:
The Plan does not constitute an express or implied contract or a promise by IBM to make
any distributions under it. IBM reserves the right to adjust the Plan terms, including but
not limited to any quotas or target incentives, or to cancel the Plan, for any individual or
group of individuals, at any time during the Plan period up until any related payments
have been earned under its terms . . .
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726 F. Supp.2d 1292, 1294 (D. Colo. July 21, 2010) (emphasis in original). The District Court
granted the defendant’s Partial Motion to Dismiss. See id. at 1298. In that case, however, the
parties did not agree that a contract existed, making any “agreement” more tenuous.7 See id. at
pp. 1296-1297. And the incentives were deeply tied to “a business model depending on
complete, final, and accurate business results,” i.e., the company’s success generally, not to the
plaintiff’s concrete sales performance. See id. at p. 1294. As a result, Geras and Lawson hold
little persuasive value here.
It is Colorado’s clear public policy that wins the day for Plaintiff on the CWCA Claim.
Colorado law generally resists supporting the type of discretionary provisions that Defendant
included in its Incentive Plans, provisions that would retroactively erase employees’ earned
commissions. In Nieto v. Clark’s Market, for example, the Colorado Supreme Court noted that
the CWCA itself “nullifies any effort to circumvent its requirements by contract, providing that
‘any agreement . . . by any employee purporting to waive or to modify such employee’s rights in
violation of this article shall be void.’” 488 P.3d 1140, 1144 (Colo. 2021) (citing C.R.S. §8-4-
121). In Hallmon v. Advance Auto Parts, the Court refused to honor an employer’s incentive plan
provision that prevented terminated employees from receiving otherwise earned incentive-based
bonuses. See 921 F.Supp.2d 1110, 1120 (D. Colo. January 29, 2023). Similar to Nieto, District
Judge R. Brooke Jackson noted that supporting such a provision would contravene the public
policy behind the CWCA. See id. (citing C.R.S. §8-4-121) (agreements waiving or modifying
employee’s rights in violation of the CWCA are void.). Adopting the Defendant’s argument
7 The plaintiff’s attempt to supplement the record with “extrinsic evidence” was denied. See id.
at p. 1295.
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would “allow employers to manipulate similar contractual language to avoid paying rightful
wages to employees by conveniently terminating them shortly before their payday . . .” Id. And
District Judge Robert E. Blackburn’s opinion in Johnson provides even more support for this
Court’s ultimate conclusion that the CWCA Claim should survive. See 2023 WL 3437372 at *5
(doubting an employer’s unilateral ability to forfeit an employee’s rights to an earned bonus).
Here, the Complaint contains sufficient, specific information to support Plaintiff’s claim that
his commissions were earned, vested, and determinable. And since the FY-2024 Incentive Plan’s
erasure clause contradicts Colorado Revised Statute §18-4-121 and clearly stated public policy,
the Plaintiff has sufficiently alleged lost wages. As a result, the Court recommends that the
Defendant’s Motion to Dismiss be denied on the CWCA claim.
II. 	BREACH OF CONTRACT CLAIM
Under Colorado Law, a breach of contract claim requires: (1) existence of a contract;
(2) performance by the plaintiff; (3) failure to perform by the defendant; and (4) damages.
See Shell v. Am. Fam. Rights Ass'n, 899 F. Supp. 2d 1035, 1058 (D. Colo. 2012) (citing W.
Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992)). With respect to the first element, a
plaintiff “must show that the contract was properly formed,” with “mutual assent to an exchange
between competent parties—where an offer is made and accepted—regarding a subject matter
which is certain, and for which there is legal consideration.” Galvin v. McCarthy, 2009 WL
890717, at *6 (D. Colo. Mar. 31, 2009) (citing Indus. Prods. Int'l, Inc. v. Emo Trans, Inc., 962
P.2d 983, 988 (Colo. App. 1997)). If the contract is ambiguous, then “‘the meaning of its terms is
generally an issue of fact to be determined in the same manner as other factual issues.’” Max
Fire Apparatus, Inc. v. Rosenbauer America, LLC, 2024 WL 5145983 at *4 (citing E. Ridge of
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Fort Collins, LLC v. Larimer & Weld Irrigation Co., 109 P.3d 969, 974 (Colo. 2005)).
For purposes of this Motion, the parties stipulate that a contract existed and that the pre-
2024 Incentive Plans provide the terms of the agreement between the parties. Therefore, the first
element of a breach of contract claim has been plausibly alleged.
Plaintiff also plausibly alleged the second element: that he performed his end of the
contract by completing numerous sales that led to an accrued backlog of over $150,000. His
accumulation of the accrued backlog necessarily requires that he completed a sale. See ECF 4 at
pp. 1-3. In the FY-2022 and FY-2023 agreements, the contract contemplated a tiered pay
structure with an up-front payment when the contract is signed and subsequent payments based
on booking of the job, collection of payment, or transfer. See ECF 9-2 at pp. 12 & 48. Although
Plaintiff does not include dates of the subsequent events specifically, he pleads that these
subsequent, triggering events continue to occur. See ECF 4 at p. 3; see also at p. 6 (“Since
October 2023, commissions have come due on sales Mr. Goodwin made under the previous
versions of the incentive plan he entered into at that time.”)
Defendant agrees that the pre-2024 Incentive Plans contemplated a tiered payment
structure but argues that Plaintiff’s Complaint “confirm[s] that the last two conditions were not
met.” ECF 9 at p. 12 (citing ECF 1-1 at ¶8). The Court does not find merit in the Defendant’s
argument. By design, the Complaint must be “simple, concise, and direct.” See Fed. R. Civ. P.
8(d)(1). And while the Complaint does not contain specific details on exactly when the full
commissions were accrued, Defendant ignores the language in Plaintiff’s Complaint that
confirms that Mr. Goodwin has “accrued backlogs [that] were built through his own hard work.”
ECF 4 at p. 4. Plaintiff went as far as to value the unpaid, accrued backlog at $156,673.12, which
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the Court takes to be the result of his sales and subsequent events that would trigger the
secondary portion of the commission. See id. As a result, the second element of a contract claim
has been sufficiently pled.
The third element of a contract claim also has sufficiently been pled. Plaintiff claimed
that Defendant has not paid him for a large portion of the commissions from sales that he
completed. See id. at pp. 4 & 6. Therefore, he says, Defendant breached the agreement.
Defendant seeks refuge in the same places as it did in the CWCA Claim: the pre-FY-2024
language that allows Defendant to “amend, modify, or terminate the plan at the company’s
discretion,” and the FY-2024 Plan language that erased the commission system (along with the
commissions that were in line for payment). See ECF 9 at p. 12. For the same reasons stated
above, those provisions contradict Colorado law and clear public policy and do not control here.
Furthermore, to the extent that the 2024 Incentive Plan renders Defendant’s payment obligations
to be ambiguous, under Colorado law, “dismissal is inappropriate when the claim ‘may have
merit if ambiguities are resolved in favor of the claimant.’” McCollam v. Sunflower Bank, N.A.,
598 F.Supp.3d 1104, 1109 (D. Colo. 2022) (citing Dorman v. Petrol Aspen, Inc., 914 P.2d 909,
915 (Colo. 1996) (en banc).
III. 	UNJUST ENRICHMENT CLAIM
To recover for unjust enrichment, Plaintiff much show that “(1) a benefit was conferred on
the defendant by the plaintiff; (2) the benefit was appreciated by the defendant; and (3) the
benefit was accepted by the defendant under such circumstances that it would be inequitable for
it to be retained without payment of its value.” Does v. Rodriguez, 2007 WL 684117, at *5 (D.
Colo. Mar. 2, 2007) (quoting Humphrey v. O'Connor, 940 P.2d 1015, 1021 (Colo. App.
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1996)). Plaintiff alleges all of the elements of an unjust enrichment claim [ECF 4 at p. 7], a claim
that is pled in the alternative to the Breach of Contract Claim. See ECF 11 at p. 11.
Defendants argue that this claim should be dismissed because “[a]s a matter of law, a party
cannot recover for unjust enrichment where there is a contract addressing the subject of the
alleged obligation to pay.” ECF 9 at p. 12 (citing Dudding v. Norton Frickey & Assocs., 11 P.3d
441, 445 (Colo. 2000)); Interbank Invs., LLC v. Eagle River Water & Sanitation Dist., 77 P.3d
814, 816 (Colo. App. 2003) (citation omitted)). Since Plaintiff also has a Breach of Contract
Claim, Defendant urges this Court to dismiss one because the two claims “cover[] the same
subject matter.” Id. at p. 13.
While the Defendant’s point is legally correct, Plaintiff has pled Claim Three as an
alternative basis for recovery the Breach of Contract Claim. See ECF 11 at p. 11. Should a jury
find that no contract, in fact, exists, then Plaintiff would be entitled to recover on the unjust
enrichment claim. Therefore, the Motion should be denied as to the Unjust Enrichment Claim.
IV. 	BREACH OF THE IMPLIED DUTY OF GOOD FAITH AND FAIR DEALING
Finally, Defendant’s request to dismiss Plaintiff’s claim based on the Implied Duty of Good
Faith and Fair Dealing similarly fails. Even though the law in Colorado is not abundantly clear in
this area as it relates to at-will employees in the employment context,8 there is significant support
for recognizing this type of claim in the District of Colorado when there is a contract between the
employer and employee. See e.g., Pownell v. Credo Petroleum Corp., 2011 WL 2580765, at *5
(D. Colo. June 29, 2011); Stout v. Gyrodata, Inc., 2013 WL 4522039, at *6 (D. Colo. Aug. 27,
8 See Decker v. Browning-Ferris Industries of Colorado, Inc., 931 P.2d 436, 442 at FN 5 (Colo.
1997) (en banc) (“We therefore express no opinion with respect to questions relating to the
recognition of an implied covenant of good faith and fair dealing in the employment context.”).
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2013); Oberhamer v. Deep Rock Water Co., 2009 WL 1193737, at *10 (D. Colo. April 29,
2009); Hyden v. Ford Motor Credit Co., 2007 WL 1879972, at *4 (D. Colo. June 28, 2007);
Atsepoyi v. Tandy Corp., 51 F. Supp. 2d 1120, 1124 (D. Colo. June 21, 1999); Price v. Federal
Exp. Corp., 660 F. Supp. 1388, 1391-92 (D. Colo. May 18, 1987). However, the duty of good
faith cannot be used to contradict explicit terms of the contract or “inject new substantive terms
into a contract.” Hyden 2007 WL 1879972, at *4 (citing Enriques v. Noffsinger Manufacturing
Co., Inc., 412 F. Supp. 2d 1180, 1184 (D. Colo. 2006)).
In Hyden, Atsepoyi, Oberhamer, and Price, the plaintiffs’ breach of contract and breach of
good faith and fair dealing claims survived a motion to dismiss because the alleged, implied
covenant derived from an existing contract and did not change the existing terms of that contract.
In Stout, on the other hand, the plaintiff’s claim did not survive because there was no “expressed
provision or promise that the employer is supposed to have violated.” 2013 WL 4522039, at *6.
Here, for purposes of the present Motion, both parties agree that the incentive plans formed a
contract. In the Complaint, Plaintiff alleged that the parties’ agreement specifically contemplated
the payment of the commissions, including “his backlog.” See ECF 4 at p. 7. The Defendant’s
withholding of Plaintiff’s “earned backlogged commission[] prevent[ed] Plaintiff from obtaining
the benefit of his bargain with Defendant.” ECF 4 at p. 8. The incentive plans, therefore, “imply
good faith and fair dealing between the parties . . .” Id. at p. 7. Because it was grounded in the
express terms of the parties’ agreement, nothing in the Plaintiff’s Complaint changed the existing
terms of the parties agreed contract.
Defendant argues that since “JCI did not exercise any discretionary power unfairly,” no claim
should proceed under this theory. See ECF 9 at p. 13 (citing Amoco Oil Co. v. Ervin, 908 P.2d
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493, 498 (Colo. 1995) (en banc). But Defendant’s own Motion and the Declaration of Ms.
Kallenberger contradict that argument, demonstrating that Defendant relied heavily on
discretionary provisions in the contract to deny the accrued backlog to Plaintiff. See ECF 9 at p.
7 (under the 2024 Incentive Plan, “JCI exercised its clear and unambiguous right to change the
incentive plan, including terminating payments that might (or might not) become due under prior
plans . . .”); see also ECF 9-2 at p. 4 (“Management has the right to amend, modify, or terminate
the plan at the company’s discretion with or without notice to the participants, and without
consultation.”). In Amoco, the principal case cited by Defendant in its Motion, because the
defendant retained substantial discretion in its contract, the jury’s verdict in favor of the plaintiff
based on the implied covenant of good faith and fair dealing was affirmed because the plaintiffs
“depended upon the good faith of Amoco in setting the rental terms.” See 908 P.2d at 499. When
the non-moving party identifies such discretionary provisions in an agreement, dismissal is not
warranted. See Fundient Inventory, LLC, v. Ouiby, Inc., 2024 WL 3936668, at *5 (D. Colo. Aug.
26, 2024); see also Price, 660 F. Supp. at 1392-93 (“Employers must realize that if they are
going to reap the profits and rewards of employee loyalty and enhanced workmanship which are
coaxed by implied promises made to the workforce, then such employers must be held to their
word.”).
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CONCLUSION
Plaintiff sufficiently alleged facts in the Complaint [ECF 4] as to all four claims. Therefore,
taking those facts to be true, his claims are plausible. Because Defendant does not meet the Fed.
R. Civ. P. 12(b)(6) standard for dismissal, the Court respectfully RECOMMENDS9 that
Defendant’s Motion Dismiss Plaintiff’s Complaint [ECF 9] be DENIED.
DATED at Denver, Colorado, this 27th day of December, 2024.
BY THE COURT:
Timothy P. O’Hara
United States Magistrate Judge
9 Be advised that all parties shall have fourteen (14) days after service hereof to serve and file
any written objections in order to obtain reconsideration by the District Judge to whom this case
is assigned. Fed. R. Civ. P. 72. The party filing objections must specifically identify those
findings or recommendations to which the objections are being made. The District Court need
not consider frivolous, conclusive or general objections. A party’s failure to file such written
objections to proposed findings and recommendations contained in this report may bar the party
from a de novo determination by the District Judge of the proposed findings and
recommendations. United States v. Raddatz, 447 U.S. 667, 676-83 (1980); 28 U.S.C. §
636(b)(1). Additionally, the failure to file written objections to the proposed findings and
recommendations within fourteen (14) days after being served with a copy may bar the aggrieved
party from appealing the factual findings and legal conclusions of the Magistrate Judge that are
accepted or adopted by the District Court. Duffield v. Jackson, 545 F.3d 1234, 1237 (10th Cir.
2008) (quoting Moore v. United States, 950 F.2d 656, 659 (10th Cir. 1991)).
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