## Facts

- Rick and Natalie Foeller became Melaleuca independent marketing executives under an agreement that entitled them to commissions and bonuses based on sales and organizational activity.
- The agreement incorporated “Policy 20,” which barred recruiting Melaleuca customers or executives to competitors and authorized termination and forfeiture of commissions “for and after the month of the violation.”
- In June 2008, the Foellers began working with a competitor and recruited Melaleuca customers while still receiving monthly commission payments from Melaleuca.
- Melaleuca did not learn of the conduct until later and continued paying commissions through October 2008; the Foellers ended their relationship with Melaleuca in November 2008.
- In April 2009, Melaleuca sued for breach of contract and sought repayment of all commissions paid from the date of breach forward, relying on Policy 20’s forfeiture language.
- The Foellers conceded breach but disputed damages, arguing Melaleuca could not recover all post-breach commissions without proving actual loss.

## Issues

1. Whether Melaleuca could recover all commissions paid after breach based solely on Policy 20’s forfeiture provision, without proving actual damages.
2. Whether the forfeiture provision operated as an unenforceable penalty under Idaho contract law.
3. Whether disputes concerning damages precluded summary judgment for Melaleuca.

## Decision

- The Idaho Supreme Court vacated the district court’s summary judgment and remanded.
- The Court held the district court erred by awarding repayment of all post-breach commissions without analyzing damages.
- The Court concluded the forfeiture provision could not be applied as a punitive measure and did not eliminate Melaleuca’s burden to prove damages.
- The Court found genuine issues of material fact as to whether and to what extent Melaleuca suffered compensable loss from the breach.

## Legal Principles

- In a breach-of-contract claim, the plaintiff must prove both the fact of damages and the amount with reasonable certainty; damages are not presumed from breach alone.
- A contractual forfeiture or fixed-sum consequence triggered by breach is scrutinized for whether it functions as liquidated damages or an unenforceable penalty; punitive provisions are not enforced as written.
- Summary judgment is improper where material factual disputes remain regarding causation or the extent of damages, including whether payments claimed as loss were offset by value received.

## Conclusion

The court required a damages showing before Melaleuca could recover commissions paid after the Foellers’ breach, treated automatic forfeiture as potentially penal, and vacated summary judgment because the record left factual disputes about actual loss and causation.


Melaleuca, Inc. v. Foeller, 155 Idaho 920 (Idaho 2014)