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Hmelyar v. Phoenix Controls

June 17, 2003


Appeal from the Circuit Court of Du Page County. No. 01-MR-709 Honorable Edward R. Duncan, Jr., Judge, Presiding.

The opinion of the court was delivered by: Presiding Justice Hutchinson


Plaintiff, Peter M. Hmelyar, appeals from an order of the circuit court of Du Page County on administrative review, affirming a decision by defendant, the Board of Review of the Illinois Department of Employment Security (the Board), that denied plaintiff unemployment benefits for December 3, 2000, through December 16, 2000. The Board found that, during this period, plaintiff was not "unemployed" under section 239 of the Unemployment Insurance Act (the Act) (820 ILCS 405/239 (West 2000)). On appeal, plaintiff contends that this finding is against the manifest weight of the evidence. We reverse and remand.

On November 9, 2000, defendant Phoenix Controls terminated plaintiff's employment. In an "Employment Separation and Release" (severance agreement) dated November 9, 2000, Phoenix Controls informed plaintiff that, from November 22, 2000, through July 12, 2001, he would receive 34 weekly severance payments of $2,295 each and that his health insurance plan would continue in force.

By a letter dated November 15, 2000, Gordon Sharp, president of MyIndoorAir, Incorporated (MyIndoorAir), offered plaintiff a job as its vice president of sales. The letter, which plaintiff signed November 15, 2000, set out the terms of employment. The terms included:

"1. Compensation including three components: salary, two contingent bonuses, and incentive stock options (ISO).

* Annual base salary of $121,000. Note that from November 13th, 2000 through July 9th, 2001 this salary and all health and dental benefits will be paid by Phoenix Controls.

* 50,000 Incentive Stock Options, with a current purchase price of $1.75/share, and a four-year vesting period (pending Board of Director approval).

2. From November 13th, 2000, through July 13th, 2001 your health and dental benefits will continue to be provided by Phoenix Controls. Additionally you are covered with all of your other Phoenix Controls benefits until the end of November. Consequently, from December 1st and forward you will be eligible for all of the following Group Insurance Benefits except health and dental coverage."

The "Group Insurance Benefits" included life, short-term disability, and long-term disability insurance. The value of any benefits was tied to plaintiff's salary.

Plaintiff filed a claim with the Illinois Department of Employment Security for unemployment benefits for December 3 through 16, 2000. The claim included a "work search record" for the week ending December 15, 2000. Phoenix Controls protested the claim. The case went to a hearing before a referee on January 24, 2001. Plaintiff and Jamie Hopmayer, Phoenix Controls' human resources manager, testified by telephone. At the time of the hearing, the severance agreement had not been filed; thus, the referee had not reviewed it.

Plaintiff testified that his last day of employment for Phoenix Controls was November 9, 2000. At that time, plaintiff's weekly salary was $2,295. Although the letter from MyIndoorAir stated that plaintiff's "annual base salary" would be paid from November 13, 2000, through July 9, 2001, that "salary" was reflected as part of his severance package. Plaintiff believed that, if he stopped working for MyIndoorAir, he would still receive his severance pay from Phoenix Controls. Plaintiff was looking for other job opportunities, but he and Sharp had hoped that, as soon as MyIndoorAir obtained enough financing, plaintiff could begin to "draw *** money from the company."

Plaintiff further testified that Sharp had started Phoenix Controls but left approximately two years before the hearing to form MyIndoorAir. At one time, MyIndoorAir was a unit of Phoenix Controls and had leased office space from Phoenix Controls, but since January 2000 the companies had been "separate business entities."

Since mid-November 2000, plaintiff had assisted MyIndoorAir with marketing research and developing a business plan. In the week beginning December 3, 2000, plaintiff devoted approximately 16 hours to this work; for the week beginning December 10, 2000, the figure was 20 hours. To date, plaintiff had received no "W-2 wages" from MyIndoorAir. His contract provided for several contingent bonuses, but none had been paid because the contingencies relating to raising capital had not been fulfilled. Also, the stock ...

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