Anderson v. First American Group of Cos.

• Decision Date: 27 September 2004
• Docket Number: No. 1-03-1975.,1-03-1975.
• Citation: 353 Ill. App.3d 403,818 N.E.2d 743,288 Ill.Dec. 808
• Parties: Randall S. ANDERSON, Plaintiff-Appellee, v. FIRST AMERICAN GROUP OF COMPANIES, INC., and Asif Sayeed, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

818 N.E.2d 743

353 Ill. App.3d 403

288 Ill.Dec. 808

Randall S. ANDERSON, Plaintiff-Appellee, v. FIRST AMERICAN GROUP OF COMPANIES, INC., and Asif Sayeed, Defendants-Appellants.

No. 1-03-1975.

Appellate Court of Illinois, First District, First Division.

September 27, 2004.

Rehearing Denied November 4, 2004.

As Modified Upon Denial of Rehearing November 8, 2004.

Daniel R. Madock of Barlow, Kobata & Denis, for Plaintiff-Appellee.

Donald J. Kindwald and Richard F. Baylaender of Kindwald Law Offices, P.C., for Defendants-Appellants.

Justice McBRIDE delivered the modified opinion of the court upon denial of rehearing:

Defendants, First American Group of Companies, Inc. (First American), and Asif Sayeed, appeal the trial court's finding that plaintiff, Randall S. Anderson, qualified as an "employee" under section 2 of the Illinois Wage Payment and Collection Act (Wage Act) (820 ILCS 115/1 through 15 (West 2000)), and therefore, plaintiff was entitled to severance compensation as provided in plaintiff's employment contract as well as attorney fees. Defendants argue that plaintiff's position as vice president of operations for First American is not an "employee" within the meaning of section 2 (820 ILCS 115/2 (West 2000)). Defendants also contend that plaintiff is not an "employee" under section 1 of the Attorneys Fees in Wage Actions Act (Fee Act) (705 ILCS 225/0.01 through 1 (West 2000)) or, in the alternative, plaintiff failed to comply with the Fee Act and is not entitled to an award of attorney fees.

The following evidence was admitted at the May 2003 bench trial.

First American is a holding company for two subsidiaries: American Health Care Provider Plan, Inc. (AHCP), and American Unified Life and Health Company, Inc. (AULH). AHCP was a health maintenance organization (HMO) and AULH was a preferred provider organization (PPO). First American operates in Illinois, Indiana and Arkansas.

In 1999, First American was in the process of acquiring another HMO, Maxicare. Plaintiff was employed with Maxicare at that time, but became aware of First American during the acquisition. Plaintiff began to speak and interview with Asif Sayeed and other senior executives at First American about future employment with that company. On February 15, 1999, plaintiff accepted an offer of employment with First American and began work on March 15, 1999, as the vice president of operations.

Plaintiff signed an employment contract with First American. The employment contract provided plaintiff with a salary of $160,000 to be paid biweekly. The contract also allowed relocation expenses for plaintiff in the amount of $16,000 for plaintiff to move from California to Illinois. A separate letter raised the relocation expense reimbursement from $16,000 to $20,000. As for termination, the contract stated that if plaintiff is terminated for cause, then First American is under no further obligation. However, if plaintiff is terminated without cause, then First American shall continue to pay plaintiff "an amount equal to fifty percent" of plaintiff's annual base salary in effect on the effective date of termination for a period of six months. The contract was signed by plaintiff and Elizabeth Stolkowski, First American's vice president and chief operating officer.

Once plaintiff began work, the following chain of command was in effect: plaintiff reported to Stolkowski, who reported to Daniel Splain, First American's senior vice president, who reported to Sayeed, First American's president and chief executive officer. Sayeed also served as the owner and one of the directors for First American.

Plaintiff's responsibilities at First American included overseeing claims, customer service, enrollment, and account management for AHCP. Plaintiff was later placed in charge of information technology. Plaintiff oversaw several employees, and the directors for operations, enrollment and information technology. He also hired a deputy to his position and an operations person to assist in Medicare operations. Plaintiff also had the authority to hire consultants for First American. Dr. Nalani Thakrar also oversaw the payment of claims. Plaintiff was not an officer or director of First American. Plaintiff needed approval from Sayeed before making any significant changes in company policy or processes. Sayeed also had to approve plaintiff's expense reimbursement requests.

In the summer and fall of 1999, First American began to struggle and became the subject of an audit by the Illinois Department of Insurance. The Department of Insurance retained American Insurance Management (AIM) to perform the audit of First American. The Office of the Special Deputy (OSD) of the Department of Insurance moved into First American and began handling financial operations of AHCP and AULH. During this time of First American's instability, plaintiff began to consider investing in the purchase of another HMO. Eventually, in the fall of 1999, plaintiff invested in the purchase of Emerald HMO, later renamed Renaissance. Renaissance operated in Ohio. Plaintiff participated in this purchase with Stolkowski, Splain, and other former First American executives. Plaintiff was listed as the senior vice president of Renaissance in its licensure filings in the State of Ohio. Plaintiff remained employed at First American while the purchase of Renaissance took place, but stated that he did not work for Renaissance until after he was terminated and did not perform work for Renaissance on First American's time.

Around the end of March 2000, Sayeed discovered plaintiff's involvement in the Renaissance acquisition, but he did not confront plaintiff with that information. On March 31, 2000, Sayeed fired plaintiff, stating that plaintiff was not a team player and was not performing his job. Plaintiff had not received any negative performance reviews prior to his termination. Plaintiff made a demand through his attorneys for severance under his employment contract and for relocation expenses, which included rent payments of $900 per month. First American denied plaintiff's demand.

Following the trial, the trial court ruled in favor of plaintiff, finding that plaintiff was an "employee" under the Wage Act and that plaintiff was terminated without cause. The trial court awarded plaintiff $6,666.67 in severance and $4,050.88 in relocation expenses. The trial court rejected plaintiff's claim for reimbursement for rent. The trial court also ruled that plaintiff was entitled to attorney fees and entered an order granting plaintiff $34,495 in attorney fees and $2,835.92 in costs. Defendants raise two issues on appeal.

The first question for this court to consider is whether plaintiff is an "employee" under section 2 of the Wage Act. Defendants maintain that this issue raises a mixed question of law and fact and is subject to a clearly erroneous standard of review. Plaintiff disagrees and asserts that the trial court's decision that plaintiff is an "employee" under the Wage Act is reviewed to determine if it was against the manifest weight of the evidence.

We agree with defendants. A mixed question of law and fact is one involving an examination of the legal effect of a given set of facts. AFM Messenger Service, Inc. v. Department of Employment Security, 198 Ill.2d 380, 391, 261 Ill.Dec. 302, 763 N.E.2d 272 (2001). Stated another way, a mixed question is one in which the historical facts are admitted or established, the rule of law is undisputed, and the issue is whether the facts satisfy the statutory standard, or whether the rule of law as applied to the established facts is or is not violated. AFM Messenger, 198 Ill.2d at 391, 261 Ill.Dec. 302, 763 N.E.2d 272. Here, the question as to whether plaintiff qualifies as an "employee" under the Wage Act presents a mixed question of law and fact. Our analysis is partially factual because we must consider whether plaintiff's position with First American falls within the definition of "employee" in section 2. However, we also face a legal question in interpreting section 2.

The clearly erroneous standard of review lies between the manifest weight of the evidence standard and the de novo standard, and as such, it grants some deference to the trial court's decision. AFM Messenger, 198 Ill.2d at 392, 261 Ill.Dec. 302, 763 N.E.2d 272. When faced with a mixed question of law and fact, the trial court's decision will be deemed "clearly erroneous" only where the reviewing court, on the entire record, is "`left with the definite and firm conviction that a mistake has been committed.'" AFM Messenger, 198 Ill.2d at 395, 261 Ill.Dec. 302, 763 N.E.2d 272, quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746, 766 (1948). Nonetheless, that the clearly erroneous standard is largely deferential does not mean, however, that a reviewing court must blindly defer to the trial court's decision. AFM Messenger, 198 Ill.2d at 395, 261 Ill.Dec. 302, 763 N.E.2d 272.

Section 2 of the Wage Act provides, in relevant part:

"As used in this Act, the term `employee' shall include any individual permitted to work by an employer in an occupation, but shall not include any individual:

(1) who has been and will continue to be free from control and direction over the performance of his work, both under his contract of service with his employer and in fact; and

(2) who performs work which is either outside the usual course of business or is performed outside all of the places of business of the employer unless the employer is in the business of contracting with third parties for the placement of employees; and

(3) who is in an independently established trade, occupation, profession or business." 820 ILCS 115/2 (West 2000).

Defendants contend that plaintiff's position as an executive employee at First American removes him from section 2's coverage. Defendants base this assertion on their construction of the Wage Act. Defendants cite to ...