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Bires v. WalTom

September 23, 2009


The opinion of the court was delivered by: Blanche M. Manning United States District Judge

Judge Blanche M. Manning


Plaintiff Kelly Bires filed suit against WalTom, LLC and TD Racing Development, LLC (collectively, "WalTom") seeking a declaratory judgment that the contract the parties entered into is null and void for a variety of reasons. The defendant moves for summary judgment on seven of Bires' eight counts in his First Amended Complaint ("FAC"). In addition, Bires has moved for judgment on the pleadings as to four of the eight counts in his First Amended Complaint. For the reasons stated herein, WalTom's motion for summary judgment is granted in part and denied in part and Bires' motion for judgment on the pleadings is granted in part and denied in part.

I. Background

Prior to laying out the facts, the court notes that each party, in response to certain of the other party's statements of fact, states that it either cannot admit or deny or simply denies the statement of fact because it has insufficient knowledge of that statement of fact. In addition, WalTom denies several of Bires' additional statements of fact without citation to the record. These are inappropriate responses. If a party disputes a fact, it must point to record evidence in support of the denial. If it does not point to record evidence, the court will deem the fact admitted. Thus, to the extent that either party denies a statement of fact because it lacks knowledge or denies a statement of fact but fails to point to any record evidence in support of the denial, these facts will be deemed admitted without specific comment by the court.

Bires is a professional racecar driver by trade and currently competes with great success in prestigious racing series sponsored by the National Association for Stock Car Auto Racing ("NASCAR"). He grew up in Mauston, Wisconsin, which has a population of less than 4,000 people, did not go to college, and is not educated or skilled in any profession other than racing.

In 2004, WalTom had instituted a Driver Development Program to educate and train young drivers such as Bires who demonstrated a superior ability in motorsports. During the calendar year 2005, Bires operated his own race team. Bires does not recall the amount of money he earned prior to driving for WalTom.

In the hopes of driving a full race season schedule in the ASA Late Model Series in 2006 and receiving the instruction, mentoring, and financial support that WalTom could provide, Bires applied for a position with WalTom in October 2005. He was 22 years old. Shortly thereafter, WalTom contacted Bires and invited him to participate, along with other drivers, in a series of driving tests to be held over a period of three days at a test track in Hudson, North Carolina.*fn1

Bires attests that he had to pay for his flight and lost earnings while he attended the driving test and was "inconvenienced."

WalTom entered Bires in a race in Pensacola, Florida on December 3, 2005. According to Bires, prior to the race, he worked in WalTom's shop for approximately a week and a half without pay and incurred expenses to commute two hours each way on some days.

On December 2, 2005, Bires signed a standstill agreement (which Bires refers to as the "Lock-up Agreement"), that prohibited him from negotiating or signing with another team for 45 days beginning on December 1, 2005. The standstill agreement provided that "for a period of forty-five (45) days beginning on Thursday, December 1, 2005 and ending on January 14, 2005 [sic] [Bires] agrees that he nor any representative or agent will not participate in any form of negotiations or discussions regarding Driver's driving services with any other race team other than WalTom Racing." Plaintiff's Exh. 3. Bires contends that he had no meaningful choice but to sign the standstill agreement because WalTom presented it to him on a take-it-or-leave-it basis. Bires also states that he did not have sufficient time to review the standstill agreement and did not consult with a lawyer about it.

Immediately after signing the standstill agreement, Bires ceased all discussions with all other race teams relating to his driving services, foregoing other purported opportunities. Prior to entering into the first agreement with WalTom in December 2005, Bires was talking to "pretty much anyone and everyone that may have had an opportunity to race with them."

A some point in December 2005, the specific date is disputed by the parties, WalTom and Bires began discussions regarding Bires' driving for WalTom. At some point during that time, Bires, a Wisconsin native, leased an apartment in Hartland, Wisconsin, near WalTom's racing shop. According to Bires, a late December 2005 telephone call between Tom Gleitsman and Bires constituted a "formal offer" of a position with WalTom while subsequent discussions solidified the terms of their relationship. Bires states that these initial conversations resulted in an oral agreement that Bires would race on WalTom's ASA Late Model race team for the 2006 season and he would promptly lease an apartment near WalTom's race shop in Sussex, Wisconsin. In return, Bires asserts that "it was agreed" that WalTom would, among other things, provide instruction and mentoring services, pay Bires a competitive salary sufficient to keep him financially afloat, pay Bires additional compensation based on his finishing positions; pay Bires' living expenses in Sussex, Wisconsin including rent, utilities, dental work, health insurance, and tax preparation services, and pay the expenses associated with running a competitive racing team.

Bires also states that WalTom never informed or indicated to him that its promises would not be binding unless and until a written contract was signed, or that a condition of the agreement was that Bires would pay WalTom a portion of his future income or other consideration. Bires attaches as his Exhibit 9 a copy of a press release announcing Bires as a new driver for WalTom Racing.

WalTom denies that there was an oral agreement and denies the existence of any agreement on any terms beyond those in the written Driving Agreement.*fn2 WalTom contends that, while it paid Bires for the months of January and February 2006 and paid Bires' security deposit for his apartment, no formal offer of employment was made to Bires until it presented him with an initial version of the Driving Agreement during the second week of January 2006.

After receiving the first version of the agreement, Bires spoke with Tom Gleitsman and John Mulvenna, the General Manager of WalTom, about the contract, including the salary term. The first version of the Agreement presented to Bires provided for a salary of $1,700.00 per month.

Bires states that he "was surprised" to see the 25% royalty provision in the draft Agreement but that the draft did not contain any other "new" obligations (i.e., obligations different from the purported oral agreement) on his part. WalTom estimated that at the time the Driving Agreement was executed it could earn about $7 million from Bires pursuant to the royalty provision.

Bires states that he initially refused to sign the written Driving Agreement but that WalTom pressured him to sign it based on the "financial penalties and logistical burdens that he would have suffered had he not signed it." Plaintiff's Statement of Additional Fact , ¶ 53. These penalties and burdens included finding substitute employment, which would have been "nearly impossible" and relocating his residence. Bires ultimately signed the Agreement on February 7, 2009.

The parties appear to dispute what WalTom paid Bires over the course of the Agreement. Pursuant to Bires' deposition, WalTom states that it paid Bires $2,800 before he signed the Agreement and $2,800 "every month after he signed the contract [while Bires drove for them]." In an affidavit filed with his response to WalTom's motion for summary judgment, Bires attests that WalTom paid him $2,800 on January 11, 2006, and another $2,800 on February 1, 2006, before Bires signed the Driving Agreement on February 7, 2006. Bires also attests in his deposition that WalTom then only made two more $2,800 payments, one on March 1, 2006, and one on April 1, 2006.

In addition to salary, WalTom paid Bires an unnamed percentage of race winnings and monetary bonuses. However, Bires denies that WalTom paid all of its own expenses associated with running a competitive racing team.

During the 2006 racing season, Bires won six races and was named the 2006 Challenge Series Rookie of the Year and Challenge Series Champion. The total paid by WalTom in 2006 for race-related expenses was over $730,000. WalTom's earnings for the same year were $266,879 for a net loss of over $460,000. In previous years, from its inception in 2000 until 2005 (the year before Bires was signed), WalTom spent over $3,000,000 more than it made in its racing enterprise. During just the first two years of WalTom's Driver Development Program (2004 and 2005), WalTom lost at least $854,517 (2004) and $262,642 (2005), respectively. WalTom sold its physical assets, including tool, equipment, trailers, etc., in 2007 to co-defendant TD Racing Development, LLC.

Bires earned $347,610 in 2007. Under the contract with Bires, WalTom would be entitled to royalties of $61,902.50 for 2007, while Bires would retain $285,707.50 for the same year. For 2008, Bires grossed $508,598.49, of which WalTom's royalty would be $102,149.62. According to Bires, this latter amount represented 44% of Bires' after-tax income as reported on his 2008 tax return.

During the 2007 and 2008 racing seasons, Bires raced "successfully" in races in the "high-level" Craftsman Truck and Busch Series of NASCAR. While Bires states that these wins were "through no effort of WalTom," WalTom contends that part of Bires' success is based in part on his driving with them and "participation in WalTom's Driver Development Program." Bires further states that in addition to generating earnings for WalTom, he provided value to WalTom by working "upwards of sixty hours per week" in WalTom's race shop.

Although not expressly stated, WalTom apparently did not renew the Agreement with Bires after the end of the 2006 racing season.

II. Standards

Plaintiff's Motion for Judgment on the Pleadings. Under Rule 12(c), "a party can move for judgment on the pleadings after the filing of the complaint and answer." Supreme Laundry Serv., LLC v. Hartford Cas. Ins. Co., 521 F.3d 743, 746 (7th Cir. 2008). A motion for judgment on the pleadings should be granted "only when it appears beyond a doubt that the plaintiff cannot prove any set of facts to support a claim for relief and the moving party demonstrates that there are no material issues of fact to be resolved." Id. In deciding the motion, the court must take the facts alleged in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007).

Defendants' Motion for Summary Judgment. Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A genuine issue of material fact exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The existence of a factual dispute is not sufficient to defeat a summary judgment motion, instead the non-moving party must present definite, competent evidence to rebut the movant's asserted facts. Butts v. Aurora Health Care, Inc., 387 F.3d 921, 924 (7th Cir. 2004).

III. Plaintiff's Notice of Supplemental Authority

On August 27, 2009, the plaintiff sent a letter attaching briefs from the summary judgment filing in a 1990 case, New Medico Assocs. v. Kleinhenz, No. 90 C 6782 (N.D. Ill.), stating that the briefs were "supplemental authority." The plaintiff then directs the court to various pages of the briefs and the exhibits. The plaintiff, however, did not receive leave of court to submit this information to the court; thus, the court will not consider it in addressing the motions currently before it.

IV. Analysis

A. Count I--Illinois Wage Assignment Act

Bires' first count claims that Section 5 of the Driving Agreement violates the Illinois Wage Assignment Act, 740 ILCS § 170/1 for a variety of reasons, and as a result of the noncompliance, the "wage assignment provision" (i.e., Section 5) is unenforceable. Section 5 states as follows:

For a period of ten (10) years after Driver ceases driving for WalTom Driver shall pay royalties to WalTom in the amount of twenty-five percent (25%) of all Future Race-Related Earnings defined as follows: Future Race-Related are any and all gross monies or other consideration earned or received at any time by or on behalf of Driver as a result of Driver's activities in and throughout the Racing Industries.

The Driving Agreement further exempted the first $100,000 of Driver's Future Race-Related Earnings

The Illinois Wage Assignment Act states as follows:

No assignment of wages earned or to be earned is ...

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