                   COURT OF APPEALS OF VIRGINIA


Present: Judges Benton, Elder and Senior Judge Cole
Argued at Richmond, Virginia


WELLS FARGO ALARM SERVICES, INC.
                                             OPINION BY
v.   Record No. 1051-96-2            JUDGE JAMES W. BENTON, JR.
                                           MARCH 25, 1997
VIRGINIA EMPLOYMENT COMMISSION and
 CLAUDE H. COLLIER, JR.


          FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
                   Melvin R. Hughes, Jr., Judge
           James Emmett Anderson for appellant.

           Lisa J. Rowley, Assistant Attorney General
           (James S. Gilmore, III, Attorney General;
           W. Rand Cook; McCaul, Martin, Evans & Cook,
           on brief), for appellees.



      Wells Fargo Alarms Services, Inc., appeals from a decision

of the trial judge affirming a ruling of the Virginia Employment

Commission.   Wells Fargo argues that (1) the trial judge erred in

affirming the commission's finding that Claude H. Collier's

conduct did not constitute misconduct for purposes of Code

§ 60.2-618(2); (2) Wells Fargo did not condone Collier's conduct;

(3) the commission erred in denying Wells Fargo's request to

present additional evidence; and (4) the trial judge erred in

refusing to remand the case to the commission for a hearing to

determine whether the commission's decision was procured by

extrinsic fraud.   For the reasons that follow, we affirm the

trial judge's decision.
                                  I.

        Wells Fargo sells and installs fire alarms and security

systems.    Claude H. Collier began his employment as a sales

representative in Wells Fargo's Richmond office on September 9,

1991.    Collier was discharged on April 22, 1994, for failure to

follow company policy, and he filed a claim for unemployment

compensation.    The commission's deputy granted Collier

compensation.    Wells Fargo appealed from that decision.
        The evidence at the appeals examiner's hearing proved that

in 1992 Collier conducted extensive negotiations to obtain Allied

Signal as a Wells Fargo customer.      Allied Signal had been

serviced by one of Wells Fargo's competitors for twenty-five

years.    When Collier learned that Allied Signal no longer wanted

to use the services of the competitor, he began negotiating a

transaction valued at $500,000.    Because Collier was a relatively

new employee, his "branch manager . . . was fully aware of every

transaction that [he] was going through in negotiating" with

Allied Signal.    Collier testified that "Allied [Signal] was in

the process of revamping [its] entire system" and would switch to

Wells Fargo only "at a certain price."     Collier also testified

that after he showed his branch manager the documents about the

cost of the job and informed him about the amount Allied Signal

was willing to pay, his branch manager said, "Well, when we do a

takeover from another company, [it] can't go in as a direct sale.

It has to go in as a leased system because of the investment."




                                 - 2 -
Collier further testified that a contract was not prepared

because his branch manager stated, "We will not enter into a

contract at this time because we don't know how this thing is

[going to] wind-up."

     Collier testified that because of the structure of the

transaction his branch manager had to obtain the approval of the

district sales manager, Bill Winter.   Collier also testified that

he and the branch manager informed Winter of the transaction,

sent him information by facsimile, and generally kept him

informed.   Collier testified that Winter approved the

transaction.   Collier further testified that after the

transaction was approved, the following occurred:
          I was called in to say, "Okay. This is how
          the job's gonna go." [The branch manager]
          said, "We will go with that figure." And
          that figure was $325,000.00 for the
          installation, which is money up front to
          Wells Fargo, and $40,000.00 to be paid to us
          annually. A purchase order was written from
          Allied Signal to Wells Fargo explaining
          exactly that.


Collier testified that the branch manager, the applications

engineer, and the accounting coordinator, the individual who

calculated Collier's commissions, also approved the transaction.

Collier stated that three of his supervisors had to give their

approval before he was paid.

     Wells Fargo's representative at the hearing was Thomas N.

Griffin, Jr., the current general manager for Wells Fargo's

Washington D.C. office and a former general manager of the




                               - 3 -
Richmond office.   Although Griffin had little personal knowledge

of Collier's case, he testified that "on a job this large, it

would be very unusual for folks at much higher places not to know

about it" and that "it's fair to say . . . the job could not have

been approved without . . . folks above [Collier] knowing about

it."   He also testified "that normally when we takeover something

[from a competitor], we take over with a lease . . . [because]

you try to go in with as an attractive . . . composition as you

can, in order to make the fellow feel it is an attractive

alternative to what he already has."     He further testified that

"the general manager must approve sales commissions."
       After Wells Fargo's auditors raised questions regarding the

transaction, a meeting was held among Collier, other employees at

the Richmond branch, lawyers, and corporate officials.    Collier

testified that he and another employee were "instructed not to

say anything" at that meeting.

       Wells Fargo contended that Collier improperly treated the

transaction, which should have been a lease-purchase arrangement,

as a lease.   Wells Fargo argued that, as a consequence, Collier

was overpaid $11,570 in commissions and $5,021 in bonuses because

under its commission policy sales representatives receive a

greater commission for a lease than a sale.    Wells Fargo also

asserted that Collier failed to follow company policy because he

used purchase orders that were submitted by Allied Signal and

failed to execute Wells Fargo's approved, written contract in




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making the transaction with Allied Signal.

     Based upon evidence at the hearing, the appeals examiner

found that Collier "did not misrepresent any facts to [Wells

Fargo]" and that the "[m]isrepresentations were made by

[Collier's] superiors."   The appeals examiner affirmed the

decision of the deputy that Collier was qualified to receive

unemployment compensation.

     Wells Fargo appealed that decision and requested that the

commission take additional evidence.   The commission denied Wells

Fargo's request to take additional evidence.   In ruling on the

merits of the appeal, the commission found that Collier's

"involvement in the [Allied Signal] transaction was monitored by

[Collier's] superiors, including his supervisor, the accounting

coordinator, and the branch manager [and that the] transaction

was also coordinated by the branch manager."   The commission

further found that Collier "believed that approvals for certain

aspects of the transaction had been obtained from the district

sales manager."   The commission also noted that Wells Fargo

"presented no evidence of the policies which [Collier] is alleged

to have violated."   Although the commission stated that Collier

demonstrated poor judgment by remaining silent as instructed at

the meeting with Wells Fargo's lawyers, the commission found that

"this alone is not sufficient to establish that [Collier]

breached his duty of loyalty or honesty to the company."    In view

of the involvement of Collier's supervisors, the commission



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concluded that Wells Fargo "did not present sufficient evidence

to establish that [Collier] was guilty of misconduct connected

with work."

     Wells Fargo appealed to the circuit court.   After the trial

judge affirmed the commission's findings, Wells Fargo filed a

timely appeal to this Court.

                                II.

     Wells Fargo first argues that the commission erred in

finding that Wells Fargo failed to prove Collier engaged in

misconduct.   We disagree.
     "Initially, we note that in any judicial proceedings 'the

findings of the commission as to the facts, if supported by

evidence and in the absence of fraud, shall be conclusive, and

the jurisdiction of the court shall be confined to questions of

law.'"   Israel v. Virginia Employment Comm'n, 7 Va. App. 169,

172, 372 S.E.2d 207, 209 (1988) (citations omitted).   In accord

with our usual standard of review, we "consider the evidence in

the light most favorable to the finding by the Commission."
Virginia Employment Comm'n v. Peninsula Emergency Physicians,

Inc., 4 Va. App. 621, 626, 359 S.E.2d 552, 554 (1987).

     Furthermore, the following principle is well established:
          [A]n employee is guilty of "misconduct
          connected with his work" when he deliberately
          violates a company rule reasonably designed
          to protect the legitimate business interests
          of his employer, or when his acts or
          omissions are of such a nature or so
          recurrent as to manifest a willful disregard
          of those interests and the duties and
          obligations he owes his employer.



                               - 6 -
Branch v. Virginia Employment Comm'n, 219 Va. 609, 611, 249

S.E.2d 180, 182 (1978).   "Whether an employee's behavior

constitutes misconduct, however, is a mixed question of law and

fact reviewable by this court on appeal."    Israel, 7 Va. App. at

172, 372 S.E.2d at 209.

     Wells Fargo argues that Collier violated its policies by

structuring the Allied Signal transaction as a lease and by

failing to use an approved Wells Fargo contract in the

transaction.   We agree with the commission's finding that Wells

Fargo "presented no evidence of the policies that [Collier] is

alleged to have violated."   Moreover, the evidence proved that

when Collier began negotiations with Allied Signal, he reported

to his branch manager.    Collier described the details of the

negotiations to the branch manager and thereafter followed the

instructions given to him by the branch manager.   The evidence

further proved that the details of the transaction were reported

to the district sales manager, who also approved the transaction.

Thus, even if Collier violated company policy, the evidence

proved that Collier's conduct was at all times authorized and

directed by his superiors.   Because Collier was following the

instructions of his immediate supervisor, Collier's deviation

from the rule was authorized.
     Although misconduct may be established by proving "an act or

omission showing willful disregard of the employer's interest,"
Branch, 219 Va. at 611, 249 S.E.2d at 182, we cannot ignore the




                                - 7 -
factual circumstances and say as a matter of law that an

employee's conduct is not excused when the employee follows a

supervisor's orders to deviate from a rule.   The commission found

and the evidence proved that the transaction, which involved the

transfer of potentially profitable business from a competitor,

was approved by Collier's immediate supervisor and also Wells

Fargo's district manager.   Collier's supervisors' approval could

only have suggested to Collier that he was advancing Wells

Fargo's interests.   Therefore, we cannot say that the record

necessarily proved that Collier engaged in misconduct.

Accordingly, we hold that the evidence supports the commission's

decision.
                               III.

     Wells Fargo next asserts that Collier failed to prove that

Wells Fargo condoned Collier's conduct.   Because Wells Fargo

failed to prove that Collier engaged in misconduct, the burden

never shifted to Collier to introduce evidence in mitigation.

See Virginia Employment Comm'n v. Gantt, 7 Va. App. 631, 635, 376

S.E.2d 808, 811, aff'd on reh'g en banc, 9 Va. App. 225, 385

S.E.2d 247 (1989).   Therefore, we need not consider the issue of

condonation, because the commission properly declined to rule on

that issue.

                                IV.

     Wells Fargo also argues that the commission erred in

refusing to reopen the record for additional evidence.   We




                               - 8 -
disagree.

     The commission's regulations state as follows:
          The commission, in its discretion, may direct
          the taking of additional evidence after
          giving written notice of such hearing to the
          parties, provided:

            1. It is shown that the additional evidence
            is material and not merely cumulative,
            corroborative or collateral, could not have
            been presented at the prior hearing through
            the exercise of due diligence, and is likely
            to produce a different result at a new
            hearing; or
            2. The record of proceedings before the
            appeals examiner is insufficient to enable
            the commission to make proper, accurate, or
            complete findings of fact and conclusions of
            law.


16 VAC 5-80-30(B) (formerly VR 300-01-08 § 3(B)).

     After the hearing, Wells Fargo sought to introduce before

the commission (1) "documents pertaining to an unsuccessful wage

claim which . . . [Collier] perfected with the Virginia

Department of Labor and Industry," and (2) "documents supporting

the contention of Wells Fargo that [Collier] was discharged for

cause."   Wells Fargo stated that it failed to introduce the

evidence at the hearing because (1) the "bifurcation of duties

[within Wells Fargo's management structure] . . . prevented all

interested corporate officials at Wells Fargo . . . from having

any direct knowledge of all ongoing employment matters concerning

[Collier];" (2) at the time the hearing was scheduled, the Wells

Fargo official who coordinated the hearing with the commission

was unaware that Wells Fargo's key witnesses would be



                                - 9 -
unavailable; and (3) the Wells Fargo employee who appeared at the

hearing had, at best, second-hand knowledge of the facts of this

case.

        Finding that "the additional documents and other evidence

could have been presented at the Appeals Examiner's hearing

through the exercise of due diligence," the commission denied the

motion to reopen the record.    The commission also found that the

record was adequate "to enable the Commission to make proper,

accurate and complete findings of fact and conclusions of law."

Because the evidence supports the commission's findings, we hold

that the commission did not abuse its discretion in refusing to

accept additional evidence.     See Old Dominion Elec. Coop. v.

Virginia Elec. and Power Co., 237 Va. 385, 394-98, 377 S.E.2d

422, 427-29 (1989).

                                  V.

        Wells Fargo further contends that the trial judge erred in

refusing to remand the case to the commission for a hearing on

Wells Fargo's claim of extrinsic fraud.      Because the proffer was

insufficient to establish a prima facie case of extrinsic fraud,

we hold that the trial judge did not err.

        Extrinsic fraud is "conduct which prevents a fair submission

of the controversy to the court."       Jones v. Willard, 224 Va. 602,

607, 299 S.E.2d 504, 508 (1983).       Wells Fargo argues that Collier

committed extrinsic fraud by concealing corporate records, acting

in concert with his supervisor in a plan to deceive corporate




                                - 10 -
officials, and submitting documents to Allied Signal.      The trial

judge found that "whether these matters involve extrinsic fraud

is of no moment [because] [t]hey were covered extensively in the

hearings which afforded Wells Fargo an opportunity to present its

position on them."   The trial judge concluded that a remand was

unnecessary because "Wells Fargo ha[d] not made out a prima facie

case of extrinsic fraud as contemplated by Va. Code § 60.2-625

and Jones v. Willard, 224 Va. 602, 299 S.E.2d 504 (1983)."

     The documents that Wells Fargo alleges Collier concealed

were found in Collier's desk, at Well's Fargo's Richmond office,

after August 25, 1994.    However, Collier had been discharged four

months earlier, in April 1994.   Wells Fargo clearly had access to

the documents after Collier's termination in April.   Thus, we

cannot say that Collier engaged in conduct that prevented a fair

resolution of the case.

     For these reasons, the judgment is affirmed.

                                               Affirmed.




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