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J. Wilderman Autoplex Corp. v. Norton

November 19, 2010


The opinion of the court was delivered by: Frazier, Magistrate Judge


On February 9, 2009, Plaintiff/Counter-Defendant J. Wilderman Autoplex Corporation ("Wilderman") filed suit for declaratory judgment against Defendant/Counter-Claimant Derrick Spencer Norton ("Norton") in the Circuit Court of Wabash County, Illinois in order to determine its rights under an employment contract entered into by the parties. After removing that action to the United States District Court for the Southern District of Illinois pursuant to 28 U.S.C. §§ 1441 and 1446, Norton filed a counterclaim against Wilderman alleging that Wilderman breached the parties' employment contract when it orally terminated Norton on January 5, 2009, and when Wilderman failed to compensate Norton in accordance with the contract. Wilderman raised the affirmative defense that Norton had waived the alleged contract breaches when he accepted a payment of $6,000 after being orally terminated on January 5, 2009. After ruling on the declaratory judgment counts in a July 22, 2010 Memorandum and Order, a bench trial ensued on November 8, 2010. The following findings of fact and conclusions of law are made pursuant to Fed. R. Civ. P. 52(a)(1):


1. James J. Wilderman ("Mr. Wilderman"), the majority shareholder of Wilderman, hired Norton in September, 2006 as a member of the Wilderman staff.

2. On January 1, 2008, Wilderman and Norton entered into an employment contract that installed Norton as General Manager and Chief Operating Officer of Wilderman. The contract provided that it could only be amended, supplemented, cancelled, or discharged by written instrument.

3. The contract provided that Norton would be employed by Wilderman for a period of ten years, and that the contract would automatically be renewed for an additional period of one year each year thereafter. Notwithstanding the foregoing provisions, Norton's employment could be terminated (1) upon Norton's death, (2) at either party's option on at least 30 days prior written notice, (3) by Wilderman for cause; or (4) due to a disability by Norton.

4. Norton was entitled to a 7% commission of all gross profits of Wilderman's main store, and its annex store in Olney, Illinois. Additionally, Norton was entitled to a base salary of $1,500.00 per week, to be drawn against any commissions earned.

5. Norton would be entitled to purchase common stock in Wilderman at the end of the ten year term if certain income benchmarks were met, but if Norton's employment with Wilderman terminated prior to the end of the ten year period, no such right would vest.

6. Mr. Wilderman and Mark R. Ide had the option, but were not required, to sell Norton real estate on which Wilderman operated.

7. During Norton's term of employment, he was entitled to (1) the use of a current year automobile owned or leased by Wilderman, with all expenses being paid by Wilderman; (2) 21 days of vacation each year, during which his compensation was to accrue according to the compensation provisions of the contract; and (3) participate in any retirement, health, life insurance, disability and other related benefit plans.

8. On January 5, 2009, Mr. Wilderman informed Norton during a telephone conversation that he was terminating Norton's employment with Wilderman.

9. In a second telephone conversation with Norton, Mr. Wilderman informed Norton that he would be compensated for the first week's draw of January, 2009, the December, 2008 commission, and the three weeks of vacation pay he was entitled to during 2009. During this conversation, Norton never acknowledged that he was waiving his rights under the contract by accepting this payment.

10. Sometime on or after January 7, 2009, Norton received his final paycheck from Wilderman. Norton was paid $1,500.00 as his base salary for work performed between January 1, 2009 and January 7, 2009, and $4,500.00 for 120 hours of vacation pay. Along with his federal and state income tax, Medicare, and federal insurance contribution deductions, $190.03 was deducted from this paycheck for health and dental insurance benefits.

11. On January 19, 2009, an attorney representing Norton sent a letter to Wilderman stating that the employment contract did not allow for oral termination, that he did not believe that Norton's employment could be terminated on 30 days written notice, and that Norton was entitled to stock options, real estate, automobile use, and health insurance benefits.

12. Norton's attorney sent a second letter on January 19, 2009 to Wilderman demanding payment of $13,341.46 as compensation for Norton's weekly draws and commissions, and reaffirming that Norton was ...

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