Elsener v. Brown

• Decision Date: 10 September 2013
• Docket Number: No. 2–12–0209.,2–12–0209.
• Citation: 374 Ill.Dec. 637,996 N.E.2d 84,2013 IL App (2d) 120209
• Parties: James ELSENER, Plaintiff–Appellee, v. Roy BROWN, Defendant–Appellant (Brown Business Ledger, LLC, Defendant).
• Court: United States Appellate Court of Illinois

2013 IL App (2d) 120209

996 N.E.2d 84

374 Ill.Dec. 637

James ELSENER, Plaintiff–Appellee,

v.Roy BROWN, Defendant–Appellant (Brown Business Ledger, LLC, Defendant).

No. 2–12–0209.

Appellate Court of Illinois,

Second District.

Sept. 10, 2013.

Roy Brown, Cincinnati, Ohio, appellant pro se.

David H. McCarthy III, Law Offices of David H. McCarthy III, Naperville, for appellee.

OPINION

Justice BIRKETT delivered the judgment of the court, with opinion.

[374 Ill.Dec. 639]¶ 1 Defendant, Roy Brown, appeals from the trial court's judgment finding him personally liable on an employment contract signed by plaintiff, James Elsener, and defendant in his capacity as president of Brown Business Ledger, LLC (BBL). For the following reasons, we affirm.

¶ 2 I. BACKGROUND

¶ 3 Plaintiff, a former employee of BBL, filed a three-count complaint in February 2010 against both BBL and defendant. Plaintiff alleged that, on June 2, 2008, he signed a contract with BBL for a three-year term of employment, that he was terminated without cause on August 18, 2009, and that his contract entitled him to his remaining compensation for the three-year term. Plaintiff also sought attorney fees and prejudgment interest. In counts I and II, plaintiff brought claims under the Illinois Wage Payment and Collection Act (Wage Act) (820 ILCS 115/1 et seq. (West 2010)) against both BBL and defendant. Plaintiff alleged that defendant was individually liable under the Wage Act because he “controlled [BBL's] financial decisions” and “knowingly refused to allow [BBL] to pay [plaintiff] the compensation owed him * * *, * * * thereby knowingly permitt[ing][BBL] to violate the [Wage Act].” Count III, which apparently was brought against BBL alone, alleged breach of contract.

¶ 4 Defendant subsequently moved to dismiss, for lack of personal jurisdiction, the counts against him. On April 30, 2010, while the motion to dismiss was pending, BBL and its parent corporation, Brown Publishing Company (BPC), filed a bankruptcy petition in federal court. On May 3, BBL asserted to the trial court that the proceeding before it was automatically stayed pursuant to section 362(b)(21) of the Bankruptcy Code (11 U.S.C. § 362(b)(21) (2006)). On May 4, the trial court stayed the proceedings against BBL alone. On October 11, BPC and BBL moved the bankruptcy court for an order enforcing the automatic stay against all proceedings in the trial court. Plaintiff responded that the stay did not apply to the proceedings against defendant. On November 30, the bankruptcy court entered a stipulated order lifting the stay in part and permitting plaintiff to “proceed with the Illinois [a]ction solely against defendantRoy Brown.” The order further provided: “[Plaintiff] has not filed, will not file, and forever waives and releases his right to file a proof of claim against [BPC and BBL] and each of them and their respective estates.”

¶ 5 On June 25, 2010, the trial court denied defendant's motion to dismiss for lack of jurisdiction. Plaintiff later moved for summary judgment, which was denied.

¶ 6 The trial court conducted a bench trial in August 2010. Defendant renewed his jurisdictional motion. Plaintiff and defendant were the sole witnesses at trial.

¶ 7 Plaintiff testified that, in April 1993, he commenced publication of “The Du Page Business Ledger.” Later, he changed the name to “The Business Ledger” (The Ledger). Plaintiff was sole owner and manager of The Ledger, which was headquartered in Naperville. In the spring of 2008, BPC expressed interest to plaintiff about purchasing The Ledger. BPC was a publishing conglomerate that owned multiple publications throughout the United States. BPC was headquartered in Ohio, with offices in Cincinnati and Tipp City. Officed in Cincinnati were defendant, BPC's president and chief executive officer; Joe Ellingham, vice president and chief financial officer; and Joel Dempsey, vice president and general counsel. In May 2008, defendant traveled to Illinois and met with plaintiff in Naperville to discuss the sale of The Ledger. Subsequently, on May 26, 2008, defendant sent on behalf of BPC a letter of intent to purchase The Ledger for $900,000 cash plus a three-year contract of employment for plaintiff. The sale of The Ledger closed in June 2008. Contemporaneously, BBL was formed in Illinois to operate The Ledger. BBL became a wholly owned subsidiary of BPC. Admitted into evidence were the articles of organization for BBL, showing that it was an Illinois limited liability company with its principal place of business in Naperville. Defendant and Dempsey were appointed BBL's president and vice president, respectively. Consistent with the articles of organization, BBL's business offices were in Naperville.

¶ 8 On June 2, 2008, an executive employment contract was entered into between plaintiff as “Employee” and BBL as “Employer.” Signing for BBL was defendant, designating himself as the company's president. The contract installed plaintiff as publisher of The Ledger, with an employment term of three years and a base salary of $85,000 to be paid in biweekly installments. Article 3.1 of the contract specified two means by which BBL could unilaterally terminate plaintiff's employment prior to the end of the three-year term. BBL could terminate for “cause” (referred to as “Termination for Cause”) or “for any other reason, whatsoever, with or without cause, at the sole discretion of [BBL]” (referred to as “Involuntary Termination”). Article 3.1(i) stated: “It is expressly acknowledged and agreed that the decision as to whether ‘cause’ exists for termination of the employment relationship by Employer is delegated to Employer's President.” Article 6.1 imposed a mandate of noncompetition that would bind plaintiff “[d]uring the term of this Agreement and for a period of one (1) year after termination of this Agreement, whether terminated by cause or otherwise.” Article 3.5 provided:

“Upon an Involuntary Termination of the employment relationship by * * * Employer* * * prior to expiration of the Term, Employee shall be entitled, in consideration of Employee's continuing obligations hereunder after such termination (including, without limitation, Employee's non-competition obligations), to receive his pro rata salary through the date of such termination plus the severance amount set forward in Exhibit A.”

Exhibit A provided, with respect to “Severance,” that “Employee shall be entitled to the remaining amount of his base salary [$85,000] through expiration of the Contract Term if he is terminated not for cause.” Article 9 stated that the contract “shall be subject to and construed under the laws of the State of Illinois.”

¶ 9 Plaintiff testified that his responsibilities after the sale were much the same as they were before. Plaintiff was responsible for, inter alia, “sales” and “profitability.” Payroll operations were moved to Tipp City, and subsequently plaintiff received his biweekly salary payments from there. During plaintiff's tenure at BBL, “financial statements and reporting were in transition to go to Ohio.” Ellingham was plaintiff's day-to-day “direct report” at BBL.

¶ 10 According to plaintiff, BBL began to incur losses in the fall of 2008 because of the national economic recession. Plaintiff and Ellingham came under pressure to cut costs at BBL, and plaintiff made proposals to improve the budget. The losses continued into 2009. Plaintiff acknowledged, based on financial statements produced by BBL for 2009, that BBL was running a year-to-date loss of $55,946 as of May 31, 2009.

¶ 11 Plaintiff testified that, on June 24, 2009, he e-mailed Ellingham a financial update for BBL. The update forecast a cumulative loss of $116,784 for BBL by August 2009. Plaintiff copied defendant on the e-mail. About an hour later, defendant wrote plaintiff directly: “These expenses are WAY too high for the environment. I am not going to allow losses to mount. Please provide a cost reduction plan to get to break even in July.” Defendant copied Ellingham on the message. According to plaintiff, this was his first direct communication from defendant during plaintiff's time at BBL. On the evening of June 24, 2009, plaintiff sent defendant and Ellingham a cost-savings plan that proposed, inter alia, that all accounting work be moved to Tipp City and that all salaries (but plaintiff's) be cut by 20%. Plaintiff noted that the “largest salary” was his and that there were two years remaining on his employment contract. Plaintiff asked, “Would you consider buying me out? Perhaps we can find a win-win.” Unbeknownst to plaintiff, however, defendant had earlier that day e-mailed Ellingham a note that read: “Elsener needs to be gone ASAP. Need to breakeven [ sic ] here and in GSA.” Ellingham's e-mailed reply was: “Agreed.”

¶ 12 Plaintiff testified that, on August 17, 2009, Ellingham phoned to tell him that BPC had decided to change publishers for The Ledger, that plaintiff was terminated, and that his replacement would begin in two days. Plaintiff asked Ellingham about the “severance plan” in plaintiff's contract, and Ellingham replied that it was “something * * * to discuss with Mr. Brown.”

¶ 13 Plaintiff subsequently addressed three messages directly to defendant. First, on August 17, plaintiff e-mailed defendant asking how he “plan[ned] to proceed concerning my employment contract.” Plaintiff received no response. On August 23, plaintiff mailed defendant a letter reminding him of the August 17 note. Plaintiff also noted that he had yet to receive written confirmation of his termination. On August 26, Ellingham sent plaintiff a letter confirming that his last day was August 18. Still having received no word on his severance payment, plaintiff retained counsel. On December 31, plaintiff's counsel sent defendant a letter by registered mail demanding payment of $156,061.12, representing plaintiff's salary for the balance of the three-year contract term. Plaintiff testified that h...