Goodwin v. Johnson Controls, Inc.

1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Regina M. Rodriguez
Civil Action No. 24-cv-00989-RMR-TPO
WILL GOODWIN,
Plaintiff,
v.
JOHNSON CONTROLS, INC.,
Defendant.
ORDER
This 	matter is 	before the Court 	on 	the Recommendation of United States
Magistrate Judge Timothy P. O’Hara, ECF No. 25, entered on December 27, 2024,
addressing Defendant’s Motion to Dismiss, ECF No. 9. Magistrate Judge O’Hara
recommends that the motion be denied.
Defendant timely filed an objection to the Recommendation, ECF No. 26. Plaintiff
filed a response to the objection, ECF No. 27. The Court has received and considered
the Recommendation, the Objection, the record, and the pleadings. For the reasons
stated below, the Court sustains in part and overrules in part the Defendant’s objections
and 	accepts 	in 	part 	and 	respectfully 	rejects 	in 	part 	the 	Magistrate 	Judge’s
Recommendation.
I. 	LEGAL STANDARD
The Court is required to make a de novo determination of those portions of a
magistrate judge’s recommendation to which a specific, timely objection has been made,
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 1 of 12

2
and it may accept, reject, or modify any or all of the magistrate judge’s findings or
recommendations. 	28 U.S.C. § 636(b)(1) (“A judge of the court shall make a de novo
determination 	of 	those 	portions 	of 	the 	report 	or 	specified 	proposed 	findings 	or
recommendations to which objection is made.”); Fed. R. Civ. P. 72(b)(3) (“The district
judge must determine de novo any part of the magistrate judge’s disposition that has been
properly objected to.”).
“[A] party’s objections to the magistrate judge’s report and recommendation must
be both timely and specific to preserve an issue for de novo review by the district court or
for appellate review.” United States v. One Parcel of Real Property, 73 F.3d 1057, 1060
(10th Cir. 1996). In the absence of a proper objection, the district court may review a
magistrate judge’s recommendation under any standard it deems appropriate. See
Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991) (“In the absence of timely
objection, the district court may review a magistrate’s report under any standard it deems
appropriate.”); see also Thomas v. Arn, 474 U.S. 140, 150 (1985) (“It does not appear
that Congress intended to require district court review of a magistrate’s factual or legal
conclusions, under a de novo or any other standard, when neither party objects to those
findings.”). When no proper objection is filed, “the court need only satisfy itself that there
is no clear error on the face of the record in order to accept the recommendation.”1 Fed.
R. Civ. P. 72(b) advisory committee’s note to 1993 amendment.
1 This standard of review is something less than a “clearly erroneous or contrary to law” standard of review,
Fed. R. Civ. P. 72(a), which in turn is less than a de novo review, Fed. R. Civ. P. 72(b). See, e.g., Nat’l
Jewish Health v. WebMD Health Servs. Grp., Inc., 305 F.R.D. 247, 249 n.1 (D. Colo. 2014) (Daniel, J.).
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 2 of 12

3
II. 	ANALYSIS
Defendant does not object to the factual or procedural background discussed in
the Recommendation. Accordingly, the Court adopts and incorporates the factual and
procedural background included within the Recommendation as if set forth herein.
Defendant raises several objections to the Recommendation. First, Defendant
argues that the Magistrate Judge ignored critical terms and language in the operative
Incentive Plans2 to reach the erroneous conclusion that Plaintiff’s commissions were
earned, vested, and determinable under the Colorado Wage Act, C.R.S. § 8-4-101, et
seq. (“CWCA”). Second, Defendant argues the Magistrate Judge erroneously concluded
that Defendant failed to perform under the parties’ contract. Third, Defendant argues the
Magistrate Judge erred in failing to dismiss the unjust enrichment claim because that
claim is not available where Plaintiff has plausibly alleged the existence of a contract.
Finally, Defendant argues the Magistrate Judge erred in failing to dismiss the breach of
implied duty of good faith and fair dealing claim, because he failed to recognize that the
implied duty of good faith and fair dealing cannot change the terms of the parties’ contract.
The Court addresses each argument in turn.
2 As explained by the Magistrate Judge, the complaint references a “November 2023 Incentive Plan” and a
“new 2024 Incentive Plan.” ECF No. 4, ¶ 18. In its motion to dismiss, Defendant attached redacted versions
of the Incentive Plans for Fiscal Year 2022, 2023, and 2024. See ECF No. 9-2. Defendant later submitted
unredacted versions pursuant to a Protective Order. See ECF No. 23. As the Magistrate Judge noted,
Plaintiff did not object to the authenticity of the attached Incentive Plans. See ECF No. 11. Accordingly, the
Court will consider the attached Incentive Plans as they are central to Plaintiff’s claims and neither party
disputes their authenticity. Alvarado v. KOB-TV, LLC, 493 F.3d 1210, 1215 (10th Cir. 2007) (While
consideration of a Rule 12(b)(6) motion is generally limited to the four corners of the Complaint, the Court
may consider documents if those documents are “central to the plaintiff’s claim and the parties do not
dispute the documents’ authenticity.”).
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 3 of 12

4
A. 	Colorado Wage Act Claim
To bring a claim under CWCA, a plaintiff must allege that their wages or
compensation were “earned, vested, and determinable” under the terms of his or her
employment agreement. § 8-4-109(3)(b); Lawson v. Heartland Payment Systems, 548 F.
Supp. 3d 1085, 1091 (D. Colo. Nov. 17, 2020). Wages or compensation include bonuses
or commissions earned under an agreement between an employer and employee. § 8-4-
101(14)(a)(II). Wages are earned when they are “received as return . . . for work done or
services rendered.” Johnson v. Greenfield Holdings, No. 22-cv-01909-REB-NRN, 2023
WL 3437372, *4 (D. Colo. May 12, 2023). Compensation is vested when “‘it is not
contingent,’ 	but 	instead 	‘unconditional 	or 	absolute.’ 	” 	Id. 	Finally, 	compensation 	is
determinable when it is “capable of being determined, definitely ascertained, or decided
upon.” Id.
The Recommendation concluded that Plaintiff properly alleged his commissions
were earned, vested, and determinable. In its objection, Defendant argues that “the
Magistrate Judge ignored the critical terms and language in the operative incentive plans
to reach the erroneous conclusion that Plaintiff had earned the commissions in question
under the [CWCA].” ECF No. 26. Specifically, Defendant contends that under the clear
terms of the incentive plans, Plaintiff’s commissions are not earned, vested, and
determinable until reconciliation and transfer. ECF No. 26 at 6. According to Defendant,
because Plaintiff did not allege that these conditions precedent were met, Plaintiff’s
commissions do not constitute “wages” within the meaning of the CWCA.
To determine whether Plaintiff has properly alleged his commissions were earned,
vested, and determinable, the Court looks to the terms of the employment agreements—
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 4 of 12

5
in this case, the Pre-2024 Incentive Plans. See Gomez v. Children's Hosp. Colorado, No.
18-CV-00002-MEH, 2018 WL 3303306, at *6 (D. Colo. July 8, 2018) (“Colorado courts
have specifically held that employment agreements define when benefits are earned,
vested, and determinable.”); see Coldwell v. RITE Corp Envtl. Prop. Sols., No. 16-CV-
01998-NYW, 2018 WL 5043904, at *5 (D. Colo. Oct. 17, 2018) (“Courts have held that
for wages to be ‘earned’ or ‘vested’ under CWCA, they must be earned under the
applicable employee agreement.”); Fang v. Showa Entetsu Co., 91 P.3d 419, 422 (Colo.
App. 2003) (“For purposes of the CWCA, compensation is earned if it is vested pursuant
to an employment agreement at the time of an employee’s termination.” (citations and
quotation marks omitted)); Barnes v. Van Schaack Mortgage, 787 P.2d 207, 209 (Colo.
App. 1990) (stating that the CWCA applies “only to compensation that has been earned
under the employment agreement.”).
Under the terms of the Pre-2024 Incentive Plans, “[i]ncentive on a contract is not
actually earned until transfer and reconciliation. The Company reserves the right to
deduct overpayments from future incentive payments.” ECF No. 23, ¶¶ 7-8; Ex. A at 24;
Ex. B at 28. 	Thus, the Pre-2024 Incentive Plans provide that the commission is not
treated as earned until the contracts are transferred, reconciled, and payment is collected.
Id.
In Lawson, Chief Judge Brimmer dismissed the plaintiff’s CWCA claim because
she failed to allege that her bonuses were “earned and vested.” 548 F. Supp. 3d. at 1092.
In that case, the employment agreement explicitly stated that the bonus is not “earned”
until: (1) an installation has occurred; (2) twelve months have passed since installation;
and (3) the recipient of the bonus is still employed by the company. 548 F. Supp. 3d. at
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 5 of 12

6
1092. Chief Judge Brimmer concluded that because Plaintiff had not alleged that these
conditions 	precedent 	had 	been 	met, 	her 	bonuses 	were 	not 	vested, 	earned, 	or
determinable. Id. at 1092-94. Here, as in Lawson, Plaintiff has not alleged that the
conditions 	precedent—reconciliation, 	transfer, 	and 	full 	payment—have 	occurred.
Although Plaintiff alleges that Defendant announced its intent to continue to service the
contracts that Plaintiff (and other employees) procured and accept payment on those
contracts, there is no allegation that the contracts were fully transferred, reconciled or
paid. Under the terms of the Pre-2024 Incentive Plans, if the contract was not fully
transferred or reconciled, the advance on the commission could be “charged back,”
demonstrating that the commission is not absolute, and therefore not vested, before full
transfer and reconciliation of those contracts. Accordingly, Plaintiff has not alleged that
the accrued backlog of his commissions was “vested, earned, or determinable.”
The Pre-2024 Incentive Plans also reserved Defendant “the right to change this
incentive plan for this Plan Year and any subsequent Plan Year,” and provides that
“[m]anagement 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.” ECF No.
23, ¶¶ 7, 8, Ex. A at 24, 33; Ex. B at 28, 37. In line with this reservation of rights, Defendant
implemented a new incentive plan in 2024. The 2024 Incentive Plan provides that 100%
of commission is paid at the time of booking for all sales made on or after October 1,
2023, regardless of when Defendant collects full payment, and the contract is transferred.
Id. Ex. C. Under the 2024 Incentive Plan, any commissions that were unearned at the
expiration of the Pre-2024 Incentive Plans would remain unearned.
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 6 of 12

7
In the Recommendation, the Magistrate Judge reasoned that Colorado’s public
policy disfavoring contracts that cause employees to waive or modify their rights under
the CWCA “wins the day for Plaintiff on the CWCA claim.” Id. at 13 (citing C.R.S. § 8-4-
121) (agreements waiving or modifying employee’s rights in violation of the CWCA are
void). However, for the statute to be applicable, Plaintiff must have an enforceable right
under CWCA. See Hallmon v. Advance Auto Parts, 921 F. Supp. 2d 1110, 1119 (D. Colo.
2013) (explaining that modifying or waiving an employee’s right to wages that are already
vested under the terms of the employment agreement violates the public policy behind
the CWCA); Nieto v. Clark’s Market, Inc., 488 P.3d 1140, 1146 (Colo. 2021) (finding
forfeiture provision void under the CWCA’s where the vacation pay was earned and
determinable). Because Plaintiff has not alleged that his commissions were vested under
the terms of the Pre-2024 Incentive Plans, he has not alleged an enforceable right under
CWCA. See § 8-4-109(3)(b) (providing an employer is liable “for the amount of the earned,
vested, determinable, and unpaid wages.”). Accordingly, Plaintiff’s CWCA claim is
dismissed without prejudice.
B. 	Breach of Contract
Next, Defendant argues the Magistrate Judge erred in failing to dismiss Plaintiff’s
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)). The Magistrate Judge found that Plaintiff sufficiently pleaded all four elements.
Defendant’s objection centers on the third element, arguing that because Plaintiff did not
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 7 of 12

8
allege that all conditions precedent for his entitlement to commission under the Pre-2024
Incentive Plans were met, Defendant was not obligated to pay the “backlogged”
commissions.
Here, as explained above, the Pre-2024 Incentive Plans required reconciliation
and full payment before Plaintiff is entitled to the backlogged commission. The Pre-2024
Incentive Plans also permit Defendant to change, modify, and terminate the plans without
notice. Plaintiff does not allege the conditions precedent were satisfied while the Pre-
2024 Incentive Plans were in place. See Rosales v. AT & T Info. Sys., Inc., 702 F. Supp.
1489, 1503 (D. Colo. 1988) (Fed. R. Civ. P. 9(c) requires plaintiff to plead the performance
of conditions precedent in order to allege a claim for breach of contract) (citing Redfield
v. Continental Cas. Corp., 818 F.2d 596, 610 (7th Cir. 1987)). Accordingly, Plaintiff has
not sufficiently alleged a claim for breach of contract.
C. 	Plaintiff’s Third Cause of Action
Next, Defendant objects to the Magistrate Judge permitting the unjust enrichment
claim to go forward as an alternative claim. Defendant argues that “[b]ecause Plaintiff’s
unjust enrichment claim covers the same subject matter as the breach of contract claim,”
the Court should dismiss the unjust enrichment claim.
Although Defendant is correct that an unjust enrichment claim may not proceed
where it covers the same subject matter as the breach of contract claim, Plaintiff may still
plead both theories in the alternative. See Stone Creek Bus. Ctr. v. Stone Creek–Colo.,
No. 20-cv-01413-PAB-GPG, 2022 WL 4448822, *2 (D. Colo. Sept. 23, 2022) (“[A]lthough
a plaintiff may plead claims for breach of contract and unjust enrichment in the alternative,
a party may not recover for unjust enrichment by asserting a quasi-contract when an
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 8 of 12

9
express contract covers the same subject matter.”) (internal quotation omitted); see also
United Water & Sanitation Dist. v. Geo-Con, Inc., 488 F. Supp. 3d 1052, 1058 (D. Colo.
2020) (explaining a party may plead unjust enrichment as an alternative to a breach of
contract claim); Robert W. Thomas & Anne McDonald Thomas Revocable Tr. v. Inland
Pac. Colo., No. 11-cv-03333-WYD-KLM, 2012 WL 2190852, *4 (D. Colo. June 14, 2012)
(same). At this stage, Plaintiff may plead both a breach of contract claim and an unjust
enrichment claim. For these reasons and the reasons set forth in the Recommendation,
Defendant’s objection is overruled.
D. 	Plaintiff’s Fourth Cause of Action
Finally, Defendant argues the “Magistrate Judge erroneously concluded that
Plaintiff’s Complaint did not seek to alter the existing terms of the operative agreements
between [Defendant] and Plaintiff and the breach of implied duty of good faith and fair
dealing claim should not be allowed to proceed.” ECF No. 26 at 13.
“Every contract in Colorado contains an implied duty of good faith and fair dealing.”
New Design Constr., Inc. v. Hamon Contractors, Inc., 215 P.3d 1172, 1181 (Colo. App.
2008) (internal quotation marks omitted). A plaintiff may rely on the duty of good faith and
fair dealing “when the manner of performance under a specific contract term allows for
discretion on the part of either party.” Id. (internal quotation marks omitted). “Discretion in
performance occurs ‘when the parties, at formation [of the contract], defer a decision
regarding performance terms of the contract’ leaving one party with the power to set or
control the terms of performance after formation.” City of Golden, 138 P.3d at 292 (quoting
in part Amoco Oil Co. v. Ervin, 908 P.2d 493, 498 (Colo. 1995)). “Good faith performance
of a contract involves ‘faithfulness to an agreed common purpose and consistency with
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 9 of 12

10
the justified expectations of the other party.’ ” Amoco Oil Co., 908 P.2d at 498 (quoting in
part Wells Fargo Realty Advisors Funding, Inc. v. Uioli, Inc., 872 P.2d 1359, 1363 (Colo.
App. 1994)). The implied duty of good faith and fair dealing cannot, “[h]owever, ...
contradict terms or conditions for which a party has bargained.” Amoco Oil Co., 908 P.2d
at 498 (citing Hubbard Chevrolet Co. v. Gen. Motors Corp., 873 F.2d 873, 876 (5th Cir.
1989).) “Nor does the duty . . . inject substantive terms into the parties' contract.” Id. at
507 n.6 (internal quotation marks omitted). “Rather, it requires only that the parties
perform in good faith the obligations imposed by their agreement.” Id. (internal quotation
marks omitted).
Here, Plaintiff alleges that the Pre-2024 Incentive Plans specifically contemplated
the payment of his commissions—including his “backlog.” As discussed above, the
express terms of the Pre-2024 Incentive Plans entitle Plaintiff to payment on earned
commissions upon reconciliation and full payment on the contracts. Plaintiff alleges
Defendant breached the implied covenant of good faith and fair dealing by withholding
his accrued backlog of approximately $156,673.12 in earned wages under the Pre-2024
Incentive Plans. ECF No. 4 ¶¶ 50-52. Defendant relies on the discretionary provision of
the Pre-2024 Incentive Plans, which reserves Defendant the right to amend, modify, or
terminate the Incentive Plan at the company’s discretion with or without notice to the
participants, as grounds for terminating commissions payments that “might or might not”
become due under the Pre-2024 Incentive Plans. ECF No. 9 at 7; ECF No. 23, ¶¶ 7, 8,
Ex. A at 24, 33; Ex. B at 28, 37.
Thus, Plaintiff’s breach of implied duty claim does not inject new or substantive
terms into the contract; rather, the claim asserts that Defendant exercised its discretion
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 10 of 12

11
under the Pre-2024 Incentive Plans in bad faith to deprive Plaintiff of the benefit of his
earned 	“backlogged” 	commissions. 	See 	ADT 	Sec. 	Servs., 	Inc. 	v. 	Premier 	Home
Protection, Inc., 181 P.3d 288, 295 (Colo. App. 2007) (to prevail on claim asserting breach
of the implied covenant of good faith and fair dealing a plaintiff must establish that the
defendant exercised the discretion granted to it under the contract and deprived plaintiff
of the benefit of the contract as a result); Amoco Oil Co, 908 P.2d at 499 (finding an
implied duty of good faith and fair dealing where the contract at issue expressly confers
discretion to modify future terms). Accordingly, Plaintiff has stated a claim for breach of
the implied covenant of good faith and fair dealing.
III. CONCLUSION
The Court ORDERS:
1. 	Defendant’s Objection to the Recommendation, ECF No. 26, is SUSTAINED
IN PART and OVERRULED IN PART;
2. 	The Magistrate Judge’s Recommendation, ECF No. 25, is ACCEPTED AND
ADOPTED IN PART and REJECTED IN PART;
3. 	Defendant’s Motion to Dismiss Plaintiff’s Complaint, ECF 9, is GRANTED IN
PART as to Plaintiff’s first and second claims for relief and DENIED IN PART
as to Plaintiff’s third and fourth claims for relief;
4. 	Plaintiff’s 	first 	and 	second 	claims 	for 	relief 	are 	DISMISSED 	WITHOUT
PREJUDICE;
5. 	Plaintiff shall have twenty-one (21) days from the date of this Order to file a
motion for leave to amend, together with a proposed amended complaint
correcting the pleading deficiencies identified in the Recommendation.
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 11 of 12

12
DATED: March 27, 2025
BY THE COURT:
REGINA M. RODRIGUEZ
United States District Judge
Case No. 1:24-cv-00989-RMR-TPO Document 29 filed 03/27/25 USDC Colorado
pg 12 of 12