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Northeast Series of Lockton Companies, LLC v. David A. Bachrach

November 5, 2012


The opinion of the court was delivered by: Judge Ronald A. Guzman


Northeast Series of Lockton Companies, LLC brought suit against David A. Bachrach for various breaches of his contractual obligations as a former Member*fn1 of the plaintiff. The defendant filed a counterclaim, alleging violations of the Illinois Wage Payment and Collection Act and the Fair Labor Standards Act as well as a claim for fraud and one for equitable accounting. The plaintiff has moved to dismiss the defendant's counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the plaintiff's motion is denied in part and granted in part.


The well-pleaded allegations are accepted as true for purposes of this motion to dismiss. The plaintiff offers a variety of commercial insurance services through its Producer Members ("Members"), who have professional experience and expertise in the insurance industry. (Compl., Dkt # 1, ¶¶ 9--10.) The defendant was formerly one of the plaintiff's Members. (Id. ¶ 6.) The plaintiff's Members are compensated by commission payments based on the revenue they generate and the plaintiff's profitability. (Id. ¶ 11.) Because Members may generate income on an irregular basis, the plaintiff allows them to take regular draw payments and recover certain expenses incurred in the course of their sales efforts. (Id. ¶ 12) However, every Member is contractually bound to repay any of these draw payments and advanced business expenses that exceed the actual commissions earned by the Member. (Id. ¶¶ 12, 20.) The plaintiff alleges that despite this obligation pursuant to the Member Agreement, the Operating Agreement and the Amended Operating Agreement, the defendant failed to repay his negative capital account balance of $336,726.75 when his membership was terminated on December 15, 2011. (Id. ¶¶ 20--21, 26.)

The defendant has filed a counterclaim alleging four claims: (1) violation of the Illinois Wage Payment and Collection Act ("Wage Act") (2) equitable accounting, (3) violation of the Fair Labor Standards Act ("FLSA") and (4) fraud. (Counterclaim, Dkt. # 19, ¶¶ 69, 75, 79, 82.) The plaintiff moves to dismiss each of the counts.


The purpose of a 12(b)(6) motion to dismiss it to test to sufficiency of the complaint, not to resolve the case on the merits. Autry v. Nw. Premium Servs., 144 F.3d 1037, 1039 (7th Cir. 1998). A plaintiff must plead only "enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests." Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 764 (7th Cir. 2010). In evaluating a motion to dismiss, the court accepts as true all well-plead factual allegations in the complaint, and any inferences reasonably drawn from those facts are construed in the light most favorable to the plaintiff or, here, counter-plaintiff. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). A claim is facially plausible when the court can draw the reasonable inference from the presented facts that the defendant is liable for the alleged wrong. Bell Atl. Co. v. Twombly, 550 U.S. 544, 556 (2007).


A. The Wage Act

The defendant alleges in Count I of his counterclaim that the plaintiff failed to pay him in violation of the Wage Act. (Counterclaim, Dkt. # 19 ¶¶ 64-73.) The purpose of the Wage Act is to provide employees in Illinois with a forum to seek timely and complete payment of earned wages or final compensation without retaliation from employers. Glass v. Kemper Corp., 133 F.3d 999, 1000 (7th Cir. 1998); Miller v. Kiefer Specialty Flooring, Inc. 739 N.E.2d 982, 987 (Ill. App. Ct. 2000). The plaintiff contends that Count I must be dismissed because the Wage Act does not apply to out-of-state employees. (Pl.'s Mot., Dkt. # 23 at 5.)

The Seventh Circuit has stated, however, that "nonresidents of Illinois who work in that state for an in-state employer may qualify as employees within the protection of the Wage Act." Adams v. Catrambone, 359 F.3d 858, 862 (7th Cir. 2004). In so stating, the Seventh Circuit "focused on the geographic location in which the employee had performed work." Vendetti v. Compass Envtl., No. 06 C 3556, 2006 WL 3694852, at *2 (N.D. Ill. Dec. 14, 2006). While it is undisputed that the defendant is a resident and citizen of New Jersey (Def.'s Answer ¶6), the parties do not discuss where he performed his work. Accordingly, the Court cannot determine on the current record whether the plaintiff may pursue a claim under the Wage Act. Accordingly, the motion to dismiss this claim is denied.

B. Accounting

In Count II of his counterclaim, the defendant seeks an accounting in order to determine what is owed him. (Counterclaim, Dkt. # 19, ¶ 75.) The plaintiff moves to dismiss this count, arguing that an independent claim for accounting is unnecessary because the defendant has an adequate remedy at law.

"To obtain an accounting, a claimant must establish the absence of a remedy at law and either (1) the existence of a fiduciary relationship between the plaintiff and the person required to account, (2) the need for discovery, (3) fraud, or (4) the existence of mutual accounts which are of a complex nature." Travelers Cas. and Sur. Co. of Am. v. Paderta, 10 C 0406, 2010 WL 5419065, at *6 (N.D. Ill. Dec. 23, 2010). Here, the defendant asserts in his response brief that the Wage Act claim is an "implicit" breach of contract claim. (Resp., Dkt. # 29, at 11.) "[C]courts have dismissed accounting claims where breach of contract has also been alleged." 3Com Corp. v. Elec. Recovery Specialists, ...

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