Department of Labor ex rel. Chasanov v. Brady, C.A.No. CPU4-09-8966 (Del. Jud. 3/23/2010), C.A.No. CPU4-09-8966.

• Decision Date: 23 March 2010
• Docket Number: C.A.No. CPU4-09-8966.
• Parties: DEPARTMENT OF LABOR, ex rel., WILLIAM M. CHASANOV, Plaintiff, v. JOHN F. BRADY, and ANDRE M. BEAUREGARD, Defendants.
• Court: Delaware Court of the Judiciary

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DEPARTMENT OF LABOR, ex rel., WILLIAM M. CHASANOV, Plaintiff, v. JOHN F. BRADY, and ANDRE M. BEAUREGARD, Defendants.

C.A.No. CPU4-09-8966.

Court of Common Pleas of Delaware, New Castle County.

Submitted: February 19, 2010.

Decided: March 23, 2010.

Linda Carmichael, Esquire, Deputy Attorney General, Department of Justice, 810 North French Street, 6^th Floor, Wilmington, DE 19801, Attorney for the Department of Labor.

James H. McMackin, III, Esquire, Morris James LLP, 500 Delaware Avenue, Suite 1500, P.O. Box 2306, Wilmington, DE 19899, Attorney for Defendant Andre M. Beauregard.

William P. Brady, Esquire, Woloshin, Lynch, Natalie & Gagne, 3200 Concord Pike, Wilmington, DE 19803, Attorney for Defendant, John F. Brady.

ORDER ON DEFENDANTS' MOTIONS TO DISMISS

ALEX J. SMALLS, Chief Judge.

The Department of Labor, ex rel., ("DOL") and William M. Chasanov ("Chasanov"), bring this action against John F. Brady ("Brady") individually and Andre M. Beauregard ("Beauregard") individually and as a managing partner. Defendants Brady and Beauregard in this motion move, pursuant to Court of Common Pleas Civil Rule 12(b) (6), to dismiss this action on the basis Plaintiffs, the DOL and Chasanov, failed to state a claim upon which relief can be granted. Defendants argue the Delaware Wage Payment and Collection Act ("DWPC Act"), as codified at 19 Del. C. §1101 et seq., does not impose liability on individual members and managers of a Limited Liability Company ("LLC"). Additionally, Defendants argue Plaintiffs, 19 Del. C. §1108(1) claim is barred by the statute of limitations.

FACTS

Brady, Beauregard and Chasanov were members of the law firm formally known as Brady, Beauregard & Chasanov, LLC ("the Law Firm"). The Office of Disciplinary Counsel of the Delaware Supreme Court issued an order requiring Chasanov to step-down as a member of the Law Firm. Chasanov's role in the Law Firm changed but Chasanov continued to perform work on behalf of the Law Firm. Chasanov alleged he was due forty-five (45) percent of all fees he collected, however his pay was cut to forty (40) percent of all fees he collected beginning November 30, 2008.

The DOL, under by 19 Del. C. §105, brought this action on behalf of Chasanov pursuant to the DWPC Act to recover wages, statutory penalties, interest and attorney's fees. The DOL claims: Chasanov was an employee of the Law Firm; the Law Firm failed to pay wages due to Chasanov in violation of 19 Del C. §1102; that Brady and Beauregard are individually liable for wages due as officers, agents or managing agents of the Law Firm under 19 Del. C. §1101 (b); and that the Law Firm failed to notify Chasanov in writing, at the time of hiring, of the rate of pay and of the day, hour and place of payment, in violation of 19 Del. C. §1108(1).

Defendants filed this motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Court of Common Pleas Civil Rule 12(b) (6). Brady and Beauregard argue that the DWPC Act does not impose individual liability on members and managers of an LLC. Brady and Beauregard claim that the Law Firm was all times relevant operating as an LLC; that the DWPC Act creates liability for officers and agents of a corporation that knowingly permit the corporation to violate the Act; that an LLC is not the same as a corporation and therefore, members and managers of an LLC are not individually liable under the DWPC Act. Defendants also allege the Section 1108 claim is barred by the statute of limitations under 10 Del C. §8111. Brady further claims the complaint against him should be dismissed because he was not the managing member of the law firm and was not responsible for the payment of wages or the reduction in wages to Chasanov. The DOL opposes the motion to dismiss. A hearing on the motions was held on February 19, 2010 and the Court reserved decision.

STANDARD OF REVIEW

On a motion to dismiss, the court "must determine whether it appears with reasonable certainty that, under any set of facts which could be proven to support the claim, the plaintiffs would be entitled to relief."¹ This analysis is limited to the facts alleged in the complaint which are taken as true and interpreted in the light most favorable to the non-moving party.²

DISCUSSION

The DWPC Act was enacted by the General Assembly to provide for payment of wages and to enforce their collection.³ The DWPC Act affords employees with a statutory cause of action to collect wages due from an employer.⁴ Plaintiffs have not sued the Law Firm that allegedly failed to pay Chasanov's wages. Plaintiffs argue that Brady and Beauregard individually should be considered the employers of Chasanov. Plaintiffs attempt to hold Brady and Beauregard personally liable for the wages under 19 Del. C. §1101 (b) which states: "the officers of a corporation and any agents having the management thereof who knowingly permit the corporation to violate this chapter shall be deemed to be the employers of the employees of the corporation."⁵ Defendants argue the DWPC Act does not apply to members and managers of an LLC. Plaintiffs oppose Defendant's argument on the basis that it is premature, because they are unable to determine by whom Chasanov was employed. Thus the Court must decide the nature and form of entity of the employer and whether the DWPC Act creates potential liability for Defendants.

Plaintiffs stated at oral argument that there is an issue regarding the entity of the employer. DOL argues that this motion should be denied, to give the parties an opportunity to conduct discovery and determine the employer's entity. However, in the complaint, Plaintiffs specifically refer to the employer as: "Brady, Beauregard and Chasanov, LLC." Additionally, Brady submitted, as "exhibit A," in his motion to dismiss, a copy of the Division of Corporations "Entity Details" for Brady, Beauregard & Chasanov, LLC. The Entity Details specify that the "entity kind" is a Limited Liability Company. Thus, Plaintiffs claim that there is an issue regarding the employer's entity type is contradicted by the allegations in the complaint and by Brady's "exhibit A." This contradiction leads the Court to conclude that plaintiffs claim is not reasonably supported by the facts for which they can recover on the merits.

Next, the Court must decide whether the members and managers of a Limited Liability Company can be held personally liable under the DWPC Act. The applicable section of the DWPC Act refers to the officers and agents of a corporation.⁶ "It is well settled that statutory language is to be given its plain meaning and that when a statute is clear and unambiguous there is no need for statutory interpretation."⁷ If there is no reasonable doubt as to the meaning of the words used, the statute is unambiguous, then the Court's role is limited to an application of the literal meaning of the words.⁸ The statute is unambiguous. According to 21 Del C. §1101(b), officers and agents of a corporation who knowingly permit the corporation to violate the DWPC Act are deemed to be the employers of the employees. Section 1101(b) does not refer to LLC's. LLC's are...