United States District Court, N.D. Illinois
February 9, 2004.
PETER E. WEYENT, Plaintiff
VERTICAL NETWORKS, INC., a California corporation; and ALAN ERASER, a California resident, Defendants
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Peter E. Weyent, filed suit against Defendants, Vertical
Networks, Inc. ("Vertical Networks") and Alan Fraser, in connection with
a breach of an employment contract. Now before the Court is Defendants'
Motion to Dismiss Counts III-VII of Plaintiff's Amended Complaint,
pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons
that follow, that motion is denied.
In reviewing a motion to dismiss, the court reviews all facts alleged
in the complaint and any reasonable inferences drawn therefrom in the
light most favorable to the plaintiff. See Marshall-Mosby v.
Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000). A
plaintiff is not required to plead the facts or elements of a claim, with
the exceptions found in Federal Rule of Civil Procedure 9. See
Swierkiewicz v. Sorema, 534 U.S. 506, 511 (2002); Walker v.
Thompson, 288 F.3d 1005, 1007 (7th Cir. 2002). Dismissal is
warranted only if "it appears beyond a doubt that the plaintiff can prove
no set of facts in support of his claim which would
entitle him to relief," Conley v. Gibson, 355 U.S. 41,
45-46 (1957). The "suit should not be dismissed if it is possible to
hypothesize facts, consistent with the complaint, that would make out a
claim." Graehling v. Village of Lombard, III., 58 F.3d 295, 297
(7th Cir. 1995).
The facts, for the purposes of this motion, are taken as true from
Weyent's Amended Complaint. The facts, for the purposes of this motion,
are as follows. Vertical Networks is a California corporation with its
principal place of business in California. At all times relevant to this
action, Fraser was the President and Chief Executive Officer of Vertical
From March 1, 1999, until December 31, 2002, Weyent was employed by
Vertical Networks as a Regional Enterprise Manager. Weyent and Vertical
Networks entered into and executed two employment contracts, which are at
issue in this action.
For each year of Weyent's employment, Vertical Networks prepared a
Sales Compensation Plan (the "Plan" or "Plans") for members of its sales
team. The Plans are a series of written documents that were formally
executed by a Vertical Networks representative and Weyent. The Plans
provided for a certain amount of additional compensation if Weyent
reached applicable revenue targets.
In 2001, Weyent secured a purchase order from an Illinois-based
company, Household Finance Corporation. Pursuant to the terms of the 2001
Plan, Weyent was eligible to receive increased compensation; but he was
not paid the full amount due under the 2001 Plan. In 2002, Weyent secured
another purchase order from Household Finance Corporation. Pursuant to
the terms of the 2002 Plan, Weyent was eligible to receive increased
compensation; but he was not paid the full amount due under the 2002
Vertical Networks seeks to dismiss Count III, IV, and V of Weyent's
Amended Complaint. Both Vertical Networks and Fraser seek to dismiss
Count VI of Weyent's Amended Complaint. Finally, Fraser seeks to dismiss
Count VII of Weyent's Amended Complaint.
Quantum Meruit and Unjust Enrichment Claims
Vertical Networks contends that Weyent is unable to state a claim for
Count III and IV, his quantum meruit and unjust enrichment
Claims. According to Vertical Networks, Illinois law prohibits parties
from bringing both a breach of contract claim and a quasi-contract claim,
such as a claim for unjust enrichment.
Under Illinois law, a party cannot "state a claim for unjust enrichment
when a contract governs the relationship between the parties." Lilly
v. Ford Motor Co., No. 00 C 7372, 2002 WL 84603, at *6 (N.D. Ill.
Jan. 22, 2002) (Lilly) (quoting First Commodity Traders,
Inc. v. Heinold Commodities, Inc., 766 F.2d 1007, 1011 (7th Cir.
1985)). In Lilly, however, both the contract claim and the
quasi-contract were allowed to be pled because a good faith dispute
existed as to whether the contract governed the relationship between the
parties. Lilly, 2002 WL 84603, at *6.
Here, both the Federal Rules of Civil Procedure and Illinois pleading
rules permit parties to plead alternative and inconsistent claims. Fed.
R. Civ. P. 8(e)(2); 735 ILCS § 5/2-613. Thus, although Illinois law
prohibits parties from recovering both a breach of contract claim and a
quasi-contract claim, it is a question of fact as to whether the contract
governs the relationship between Weyent and Vertical Networks.
Accordingly, Vertical Networks' motion to dismiss Counts III and IV is
Sales Representative Act Claim
Vertical Networks further asserts that Count V, the Sales
Representative Act Claim, should be dismissed. According to Vertical
Networks, Weyent failed to make any allegation stating that he was a
sales representative instead of an employee, as defined under the
Illinois Wage Payment and Collection Act, 820 ILCS § 115/1-15.
Therefore, according to Vertical Networks, Weyent cannot recover under
both acts, which grant mutually exclusive recoveries.
"[O]ne who qualifies as an employee of the principal pursuant to the
Illinois Wage Payment and Collection Act" cannot recover under the
Illinois Sales Representative Act, Paape v. Wall Data, Inc.,
934 F. Supp. 969, 978 (N.D. Ill. 1996) (Paape). An employee does not
include a person: "(1) who is free from control over the performance of
the work; (2) who performs work that is either outside the usual course
of business or is performed outside all of the employer's places of
business 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. . . ." Paape, 934 F. Supp. at 978-79.
Here, Weyent has adequately placed Vertical Networks on notice of its
Sales Representative Act claim. Although Weyent did not specifically
plead that he was a sales representative as stated by the Paape
court, it can be reasonably inferred from Weyent's Amended Complaint that
he claims to be a sales representative. On a motion to dismiss, all
reasonable inferences are viewed in the light most favorable to the
plaintiff; and the plaintiff is not required to plead the elements of the
claim. Therefore, Vertical Networks' motion to dismiss Count V is denied.
Illinois Wage Payment and Collection Act Claim
Defendants argue that Count VI, the Illinois Wage Payment and
Collection Act claim, should be dismissed because they are not Illinois
employers; and, thus, the act is not applicable. "[T]he Wage Act only
applies to Illinois employees and Illinois employers." Liaquat Khan
v. Van Remmen, Inc., 756 N.E.2d 902, 913 (Ill.App. Ct. 2001).
Here, whether Vertical Networks and Fraser could be considered Illinois
employers is a question of fact. It can be reasonably inferred from
Weyent's Complaint that he alleges that both Defendants are Illinois
employers. Accordingly, Defendants' motion to dismiss Count VI is denied.
Tortious Interference with Contracts Claim
Fraser argues that his role as an officer of a corporation shields him
from liability from the tortious interference with contracts claim, Count
VII. Fraser further asserts that Weyent has failed to adequately plead
facts showing that Fraser acted maliciously to overcome this corporate
Officers of a corporate contracting party cannot be held liable for
tortious interference with their principal's contract because "they are
privileged to act on behalf of their corporations, using their business
judgment and discretion." George A. Fuller Co. v. Chicago Coll. of
Osteopathic Med., 719 F.2d 1326, 1333 (7th Cir. 1983). A plaintiff
may overcome this privilege by alleging the defendant acted with malice.
Stafford v. Puro, 63 F.3d 1436, 1442 (7th Cir. 1997).
Here, Weyent alleges that Fraser was the CEO and President of Vertical
Networks; thus, Fraser is privileged to act on behalf of Vertical
Networks. However, Weyent also alleges that
Fraser acted with malice by inducing Vertical Networks to breach
the relevant contracts. While Fraser argues that, under Illinois law,
Weyent must plead facts indicating Fraser acted maliciously, federal
pleading standards only require Weyent to place Fraser on notice of the
claims, which Weyent has done. See Fed.R.Civ.P. 9(b).
Therefore, Fraser's motion to dismiss Count VII of Weyent's Amended
Complaint is denied; and Fraser's motion to strike the second sentence of
paragraph ninety is also denied.
For the foregoing reasons, Defendants' Motion to Dismiss Count III-VII
of Plaintiffs Amended Complaint is denied. Fraser's motion to strike the
second sentence of paragraph ninety is denied.
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