Perthuis v. Baylor Miraca Genetics Laboratories, LLC, —S.W.3d—, (Tex. May 20,
This breach-of-contract action addresses whether a former at-will employee was
entitled to commissions on sales that closed after his termination. The parties disagree
about the applicability of the procuring-cause doctrine, which the Court concluded
governs their dispute.
Respondent Baylor Miraca Genetics Laboratories, LLC (or BMGL) hired
petitioner Perthuis as its Vice President of Sales and Marketing in 2015. BMGL drafted
the employment agreement, which Perthuis signed without alteration. That agreement
gave Perthuis an annual base salary, provided that Perthuis’s employment would be
at-will, and stated that Perthuis’s commission would “be 3.5% of your net sales.” The
employment agreement did not define “net sales” or place any other parameters on the
BMGL terminated Perthuis days after he had completed negotiations for a large
contract. BMGL then refused to pay Perthuis commissions on any sales finalized after
his termination regardless of whether Perthuis had secured the sale. Perthuis sued
BMGL for breach of contract, asserting that BMGL had wrongly refused to pay him
commissions. The case went to trial, and the court instructed the jury on the procuringcause doctrine.
The jury found for Perthuis but did not award him the full amount he
sought. The court of appeals reversed, holding that the procuring-cause doctrine did not
apply and that the parties’ contract unambiguously entitled Perthuis to commissions
only for sales made during his employment.
The Supreme Court reversed the court of appeals and remanded the case to that
court. The Supreme Court clarified that the procuring-cause doctrine is nothing more
than a default rule of construction: if a contract promises a commission, the broker is
entitled to a commission if the broker proves that the sale was the direct and proximate
result of the broker’s efforts unless the parties’ contract provides otherwise. Parties
remain free to displace the default rule of the procuring-cause doctrine with different
contract terms. But if the parties did not do so, the broker’s entitlement to a commission
vests upon his having procured the sale, not upon involvement in a sale’s execution or
the broker’s continued employment.
The contract in this case was silent about any exceptions to the obligation to pay
commissions. The Court therefore found the procuring-cause doctrine applied. The
Court then remanded the case for the court of appeals to assess any further challenges
that BMGL preserved, including BMGL’s sufficiency challenge.
Justice Huddle, joined by Justice Boyd, dissented. The dissent would have
limited the procuring-cause doctrine to seller-broker relationships in the real-estate
context and would have found the doctrine inapplicable in the employment-at-will
context. The dissent would have held that the commission provision was ambiguous,
and therefore would have remanded the case for a jury to determine whether the parties
intended Perthuis to receive commissions on post-termination sales