784 F.3d 1154 (7th Cir. 2015), 14-1921, Hess v. Bresney

Docket Nº:14-1921
Citation:784 F.3d 1154
Opinion Judge:Kanne, Circuit Judge.
Party Name:LAWRENCE J. HESS, Plaintiff-Appellant, v. KANOSKI BRESNEY, Defendant-Appellee
Attorney:For Lawrence Joseph Hess, Plaintiff - Appellant: Rex Carr, Attorney, East St. Louis, IL. Lawrence Joseph Hess, Plaintiff - Appellant, Pro se, East St. Louis, IL. For KANOSKI BRESNEY, a professional corporation, Defendant - Appellee: Kirk W. Laudeman, Attorney, Drake, Narup & Mead, Springfield, IL...
Judge Panel:Before FLAUM, EASTERBROOK, and KANNE, Circuit Judges.
Case Date:May 04, 2015
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
SUMMARY

Hess, an attorney, had worked on a number of medical-malpractice cases before his law firm, Kanoski terminated his employment. Many of these cases settled after Hess’s termination, and Hess was not compensated. He sued under his employment agreement and under the Illinois Wage Payment and Collection Act, adding claims of tortious interference, wrongful discharge, unjust enrichment, and quantum... (see full summary)

 
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Page 1154

784 F.3d 1154 (7th Cir. 2015)

LAWRENCE J. HESS, Plaintiff-Appellant,

v.

KANOSKI BRESNEY, Defendant-Appellee

No. 14-1921

United States Court of Appeals, Seventh Circuit

May 4, 2015

Argued, December 5, 2014

Appeal from the United States District Court for the Central District of Illinois. No. 3:09-cv-03334 -- Sara Darrow, Judge.

For Lawrence Joseph Hess, Plaintiff - Appellant: Rex Carr, Attorney, East St. Louis, IL.

Lawrence Joseph Hess, Plaintiff - Appellant, Pro se, East St. Louis, IL.

For KANOSKI BRESNEY, a professional corporation, Defendant - Appellee: Kirk W. Laudeman, Attorney, Drake, Narup & Mead, Springfield, IL; James Joseph Sipchen, Attorney, Donald Patrick Eckler, Attorney, Pretzel & Stouffer, Chartered, Chicago, IL.

Before FLAUM, EASTERBROOK, and KANNE, Circuit Judges.

OPINION

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Kanne, Circuit Judge.

This breach of contract action is before this court--pursuant to our diversity jurisdiction--a second time. As a refresher, Lawrence J. Hess, an attorney, had worked on a number of medical-malpractice cases before his law firm, Kanoski & Associates, P.C. (" K& A" ),1 terminated his employment. Many of these cases settled after Hess's termination, and Hess did not see a penny from the settlements. Hess felt cheated.

So he sued under his employment agreement and under the Illinois Wage Payment and Collection Act (" IWPCA" ) to remedy the perceived wrong. He also advanced claims of tortious interference, wrongful discharge, unjust enrichment, and quantum meruit, among others. In 2011, the district court dismissed each of Hess's claims on summary judgment. Hess v. Kanoski & Assocs., No. 09-3334, at *35 (C.D. Ill. Mar. 11, 2011) (" Hess I " ). The following year, we affirmed in part and reversed in part. Hess v. Kanoski & Assocs., 668 F.3d 446, 456 (7th Cir. 2012) (remanding IWPCA and breach of contract claims) (" Hess II " ). We remanded because the issue that is now squarely before us--whether Hess is entitled to compensation for post-termination settlements under either his employment agreement or the IWPCA--was " not fully briefed" at that stage of the case. Id. at 454.

On remand, and with the benefit of additional briefing, the district court held that Hess was not entitled to compensation for the post-termination settlements. As a result, the district court once again granted summary judgment in favor of K& A. Hess v. Kanoski & Assocs., No. 3:09-cv-03334, at *25 (C.D. Ill. Mar. 28, 2014) (" Hess III " ). Hess appealed, and on December 5, 2014, argued his case on his own behalf.

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After carefully considering the parties' oral arguments and briefing, we affirm the judgment of the district court.

I. Background

Lawrence J. Hess is an attorney who is licensed to practice law in Illinois and Missouri. K& A is a personal-injury law firm with offices in central Illinois. On May 9, 2001, K& A hired Hess to handle medical-malpractice cases--Hess's specialty. And for nearly six years, Hess did just that. He even won a significant jury verdict, which triggered a healthy, renegotiated salary. Then the bottom fell out. On February 14, 2007, the firm terminated Hess. Ronald Kanoski, K& A's president and administrator during Hess's employment, testified that he based this decision on " economic reasons."

If you ask Hess, the " economic reasons" included the firm's desire to reap a disproportionate share of the fees earned from the 170 breast-implant cases that Hess had worked on prior to his termination. These breast-implant cases stemmed from a nationwide settlement with Dow-Corning for its silicone-based breast implants. The number of cases, coupled with the estimated cost of remedies, induced Dow Corning into bankruptcy. Cf. Editorial, Seeking Shelter from a Legal Storm , Chicago Tribune, May 22, 1995, at 1:10. Hess also seeks to recover fees from five non-breast-implant cases on which he had worked before his termination.

Hess theorizes that K& A terminated him to avoid paying him the fees due on those cases. He asserts that he " successfully completed all the work necessary for the firm to be paid fees" on these matters. " Nothing remained to be done," Hess maintains, " except to wait for the receipt of the checks."

As an initial matter, the record lends some support to Hess's theory of motive. K& A abruptly terminated Hess without any notice, which suggests it was in a rush to get rid of him. K& A concedes that this swift termination breached the thirty-day-notice provision of their employment agreement. But that breach is of no moment to this appeal. For even if the breach gave rise to some sort of equitable, constructive employment lasting thirty days after his actual date of termination, that constructive employment would not have captured any of the settlements or their resultant bonuses; the subject cases settled outside the thirty-day window.2 As a result, Hess still would have been out of luck.

But Hess offers a backstop. Because K& A breached the notice provision of his employment agreement, he was never actually terminated--or so the theory goes. Under this theory, all the income that K& A received for his cases was received while he was still an employee at the firm. So he should have been paid the fees. K& A quickly responds with waiver. K& A contends that Hess waived this argument because he did not raise it before the district court. We address these arguments below.

Before we do, our focus turns to two provisions of the employment agreement. These provisions--one found in the original

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employment agreement and one found in a subsequent modification letter--are ultimately dispositive. They address matters related to compensation, and we introduce them now.

Section 4 of the employment agreement is titled " Compensation." It states that Hess will receive bonus pay in the amount of fifteen percent of all fees " generated over the base salary (or $5,000 per month) ... ." It further states that the " [b]onus shall increase" to twenty-five percent " on all fees received annually in excess of $750,000.00." We emphasize the words " generated" and " received" because the parties spend much of their time debating their meaning.

According to K& A, the words " generated" and " received" are used interchangeably. Under this view, they are synonymous. " Years of work can go into a case," K& A contends, " and yet, there is no fee generated unless or until there is a recovery for the client ... ." Hess disagrees. He argues that one can generate --i.e. create--something without ever receiving it. Under that common-usage view, the terms are not synonymous, and Hess would be entitled to bonuses or fees for his work that generated the fees, regardless of when the firm received them.

In Hess II, we flagged this issue for remand. 668 F.3d at 453. Noting the utility of extrinsic evidence in determining the meaning of the term " generate," we offered Hess a second path to recovery: production of extrinsic evidence...

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