United States District Court, N.D. Illinois
January 7, 2004.
NICOR ENERGY, Plaintiff and Counterdefendant,
GARY W. DILLON, Defendant and Counterplaintiff
The opinion of the court was delivered by: JAMES ZAGEL, District Judge
MEMORANDUM OPINION AND ORDER
In 1986, Defendant and Counterplaintiff Gary W. Dillon founded a
company known as Energy Management Company (EMC), an Oklahoma corporation
providing electricity and natural gas to customers in Michigan. In March
2001, Plaintiff and Counterdefendant Nicor Energy acquired EMC, continued
its operation, and employed Dillon as a Vice President in its Power
Development Division of the new EMC Unit. As part of his employment,
Dillon executed a Compensation Agreement, stating that he was responsible
for "developing and growing a profitable and robust consumer and
commercial sales and marketing platform in Michigan for `Customer Choice'
Natural Gas, Electric and Engineering Services." The Agreement
specifically replaced all of the terms of his prior employment contract
and provided for commission payments to him from contracts he brought
into the company.
In September 2002, Dillon resigned. Nicor subsequently sued him,
alleging that he and/or his associates engaged in competitive conduct
shortly before and subsequent to his resignation. Shortly thereafter,
Nicor announced to Dillon that it was "suspending all payments under the
Compensation Agreement" because of this activity. Dillon then
counterclaimed and moved to dismiss several of Nicor's claims. In July
2003, I granted Dillon's motion to dismiss
Nicor's claim for breach of the Compensation Agreement and for breach of
fiduciary duty. I specifically found that the Compensation Agreement's
"terms are limited to Dillon's employment at Nicor and thus have no
relevance to his post-employment activities."
Dillon now moves for partial summary judgment on Counts II (breach of
the Compensation Agreement) and III (violations of the Illinois Sales
Representatives Act, 820 ILCS § 120 et seq.) of his Counterclaim,
which I should grant if there is no genuine issue of material fact, and
he is entitled to judgment on the claims as a matter of law.
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Although I must draw all inferences in the light most favorable to Nicor
and must resolve any doubt against Dillon, Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986), Nicor must elucidate specific facts
demonstrating there is a genuine issue for trial, Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). Rule 56(c) also
specifically provides that summary judgment "maybe rendered on the issue
of liability alone although there is a genuine issue as to the amount of
Count II: Breach of Compensation Agreement
Nicor concedes that it breached the Compensation Agreement.
Accordingly, I enter partial summary judgment as to liability in favor of
Dillon on Count II of Dillon's Counterclaim.
Count III: Violations of Illinois Sales Representatives Act. 820
ILCS § 120 et seq.
In Count III, Dillon alleges that Nicor's failure to pay his commission
constitutes a violation of the Illinois Sales Representatives Act, 820
ILCS § 120et seq. ("Act"). Nicor argues that Dillon is not entitled
to relief under the Act because it does not apply to the relationship
between Nicor and him. First, Nicor argues that it is not a "Principal"
as defined by the Act because it does not sell tangible goods. The Act
defines the term "Principal":
(3) "Principal" means a sole proprietorship,
partnership, corporation of other business entity
whether or not it has a permanent or fixed place of
business in this State and which:
(A) Manufactures, produces, imports, or distributes a
product for sale;
(B) Contracts with a sales representative to solicit
orders for the product; and
(C) Compensates the sales representative, in whole
or in part, by commission.
820 ILCS § 120/1(3). The term "product" as used in the Act refers
"only to purveyors of tangible goods, not services." English Co. v.
Northwest Envirocon, Inc., 663 N.E.2d 448, 454 (Ill.App. Ct. 1996); see
also Kenebrew v. Connecticut Gen. Life Ins. Co., 882 F. Supp. 749, 754
(N.D. Ill. 1995) (Act inapplicable to commissions allegedly earned by
insurance agents in servicing and maintaining policy plans for prepaid
health insurance). Nicor argues that the "electrical and natural gas
contracts" that Dillon sold on its behalf do not qualify as "products"
under the Act. Rather, it argues, these contracts are more akin to the
insurance contracts found not to be "products" under the Act in
Nicor is mistaken. First, it is undisputed that part of Nicor's role in
providing electrical and natural gas contracts to clients was providing
"energy procurement" in addition to its management services. This energy
procured was electricity and gas, which are commodities that can be
purchased from various producers and sold to end users. Accordingly, at
least a portion of the contracts that Dillon sold included agreements to
sell specific quantities of natural gas and electricity to end users.*fn1
In the best case scenario for Nicor, these contracts were a combination
of commodities and management services. Therefore, the present case is
different from Kenebrew because a commodity is clearly a tangible good,
as opposed to an insurance policy,
which is essentially a service to insure against loss.*fn2 In the
end, the "products" here involve both tangible goods and services.
Although the Act does not apply to services, it obviously applies to
tangible goods. In a mixed product case such as this, I find that the
Act's very clear application to tangible goods is sufficient to bring the
"products" here within the Act's application. Accordingly, Dillon sold
"products" under the Act.
Nicor further argues that Dillon is not a "Sales Representative" under
the Act because he did not "solicit orders" for Nicor and because he was
an employee of Nicor, rather than an independent contractor hired as a
sales representative. See Kenebrew, 882 F. Supp. at 753-54. The Act
defines the term "Sales Representative":
(4) "Sales Representative" means a person who
contracts with a principal to solicit orders and who
is compensated, in whole or in part, by commission,
but shall not include one who places orders or
purchases for his own account for resale or one who
qualifies as an employee of the principal pursuant to
the Illinois Wage Payment and Collection Act
820 ILCS § 120/1(3). Regarding the charge that Dillon did not
"solicit orders" for Nicor, once again, he sold contracts to sell
specific quantities of natural gas and electricity to end users and thus
did "solicit orders" for tangible goods. Regarding the charge that Dillon
was an "employee" of Nicor and thus not a "sales representative," the
cardinal rule of statutory construction is to
ascertain and give effect to the true meaning and intent of the
legislature. English Co., 663 N.E.2d at 452. Where the language is
clear, I must give it effect. Id. Here, The Act does not limit coverage
to all employees; rather, it limits coverage only to those who are
employees pursuant to the IWPCA. The IWPCA strictly limits its coverage
to employers and employees in Illinois. 820ILCS § 115/1. Because
there are no facts to support a finding that Dillon was ever "in
Illinois" under the IWPCA, he is outside its scope. Therefore, I find
that Dillon is a "sales representative" under the Act.
In sum, the Act is applicable here. A (1) sales representative, Dillon,
(2) contracted with the principal, Nicor, (3) to solicit orders, and (4)
was compensated by commission. The Act provides that commissions due
after termination "shall be paid within 13 days of the date on which such
commissions become due," and it is undisputed that Nicor stopped paying
Dillon's commissions in March 2003, roughly six months after he resigned.
By failing to pay Dillon commissions, Nicor has violated the Act, and
Dillon is entitled to summary judgment as to Nicor's liability on Count
IE of his Counterclaim.
Attorneys' Fees and Costs
Dillon further argues that he is entitled to recover attorneys' fees
and costs spent to date in this action. Regarding his claim for breach of
the Compensation Agreement, the Agreement distinctly provides for
recovery of such fees.*fn4 Dillon is also entitled to recovery of
fees under Section 3 of the Act.*fn5 Therefore, Dillon is entitled
to an award of the portion of his attorneys' fees and costs accrued in
defending against Nicor's claims for breach of the Agreement and in
seeking recovery under Counts II and III.
Request for Expedited Hearing on Damages
Along with moving for summary judgment, Dillon requests that I expedite
any hearing on damages. This request is premature and the basis for its
justification is weak. This lawsuit involves claims by Nicor against
Dillon as well as Dillon's claims against Nicor. These claims by Nicor
could result in as much as $2 million in damages owed to it by Dillon.
Given the fact that several counterclaims remain unresolved, I find an
expedited damages phase to be premature. Moreover, Nicor's dissolution is
a weak basis for expediting a hearing on damages. There is absolutely
nothing improper about this decision to dissolve. Nicor is a Delaware
limited liability company formed pursuant to the Delaware Limited
Liability Company Act, 6 Del. C. § 18-101, et seq. Delaware statutes
provide ample guidance for the orderly winding up and dissolution of
limited liability companies. As for pending litigation involving such
the statutes contemplate such situations and protect creditors in
Dillon's position as best as they can. For purposes of the present case:
the persons winding up [a] limited liability company's
affairs may, in the name of, and for and on behalf
of, the limited liability company, prosecute and
defend suits, whether civil, criminal or
administrative, gradually settle and close the limited
liability company's business, dispose of and convey
the limited liability company's property, [and]
discharge or make reasonable provision for the limited
liability company's liabilities.
6 Del. C. § 18-803(b). Also, during the winding up process, a
limited liability company is to satisfy liabilities to creditors or to
make reasonable provision for the claims of the creditors. 6 Del. C.
§ 18-804(a)(1). Finally, the dissolving company must "make such
provision as will be reasonably likely to be sufficient to provide
compensation for any claim against the limited liability company which is
the subject of a pending action, suit or proceeding to which the limited
liability company is a party." 6 Del. C. § 18-804(b)(2). Therefore,
while Dillon's concerns regarding Nicor being unable to satisfy a damage
award in this case are warranted, he is unfortunately in no different
position than any of Nicor's other creditors or, for that matter, any
other creditor of a dissolving limited liability company. But his
position does not warrant a break from the normal course of procedure
here. Accordingly, I deny Dillon's request for an expedited damages
For the reasons above, Dillon's Motion for Partial Summary Judgment on
Counts II and III of Dillon's Counterclaim is GRANTED.