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Lane v. Le Brocq

United States District Court, N.D. Illinois, Eastern Division

October 12, 2016

NEJLA K. LANE and LANE LEGAL SERVICES, P.C., an Illinois Professional Corporation, Plaintiffs/Counter-Defendants,
v.
STEPHEN KENJI LE BROCQ, Defendant/Counter-Plaintiff.

          MEMORANDUM OPINION AND ORDER

          Ruben Castillo Chief Judge.

         Nejla K. Lane ("Lane") and her law firm Lane Legal Services, P.C. ("LLS") (collectively "Plaintiffs") bring this action against Stephen Kenji Le Brocq ("Defendant"), a former employee, alleging violations of federal privacy laws, breach of contract, fraud, and related claims. (See R. 48, Mem. Op. & Order.) Defendant, in turn, asserts counterclaims for breach of contract, fraud, intentional infliction of emotional distress, defamation, and unpaid wages under the Illinois Wage Payment and Collection Act ("IWPCA"), 820 ILL. Comp. Stat. 115/5 et seg. (R. 51, Answer & Countercl.) Plaintiffs move to dismiss Defendant's counterclaims under Federal Rule of Civil Procedure 12(b)(6). (R. 65, Mot.) For the reasons stated below, the motion is granted in part and denied in part.

         BACKGROUND

         The facts underlying the parties' dispute were fully set forth in a prior opinion and are repeated here only as is necessary to resolve the present motion. See Lane v. Le Brocq, 15 C 6177, 2016 WL 1271051 (N.D. Ill. Mar. 28, 2016). Lane and Defendant are both attorneys licensed to practice law in Illinois. Id. at *1. In May 2013, when Defendant was still a law student, he began working for Plaintiffs. Id. In May 2014, Defendant became a licensed attorney and continued working for Plaintiffs in that capacity. Id. On February 18, 2015, the parties entered into an employment agreement, which contained terms governing Defendant's salary, vacation time, entitlement to fees, use of the firm's financial accounts, and other matters. (R. 51-1, Agreement.) The agreement further provided that "[e]ither party may terminate this agreement at any time with reasonable cause." (Id. ¶ 8.) In May 2015, Defendant left the firm to start his own law firm. Lane, 2016 WL 1271051, at *2. Plaintiffs then filed this action, alleging that when Defendant left the firm he stole information and clients and breached various aspects of the parties' written employment agreement. Id. at *4. The Court granted in part and denied in part Defendant's motion to dismiss the complaint under Rule 12(b)(6). Id. at *5-15.

         Thereafter, Defendant answered the complaint and asserted six separate counterclaims, claiming that it was Plaintiffs who acted wrongfully and breached the parties' employment agreement. (R. 51, Answer & Countercl. ¶¶ 7-58.) In Count I, he alleges that Plaintiffs breached the parties' agreement by failing to pay him wages and vacation pay in the amount of $12, 750. (Id. ¶¶ 7-11.) In Count II, he alleges that Plaintiffs' failure to pay him his unpaid wages constituted a violation of the IWPCA. (Id. ¶¶ 12-27.) In Count III, he alleges that Plaintiffs breached the parties' agreement by failing to pay him his portion of fees generated in cases he worked on while employed at LLS. (Id. ¶¶ 28-36.) In Count IV, he alleges that Plaintiffs engaged in fraud when Lane told him he was free to leave the firm at any time and that she would be "happy" for him to open his own law practice-statements he claims were patently false. (Id. ¶¶ 37-44.) In Count V, Defendant alleges intentional infliction of emotional distress against Lane, claiming that she "has done everything possible to attempt to sabotage and otherwise destroy Defendant's life" since he left the firm, including telling law enforcement agencies, state bar regulators, and others that he is "untrustworthy, a thief, [and] not fit to practice law." (Id. ¶¶ 45, 48.) In Count VI, Defendant alleges that Lane defamed him during her "crusade of vilification" after he left the firm, making negative statements about him to "a host of individuals and entities." (Id. ¶ 53.) He seeks an award of actual damages, attorneys' fees, and other relief. (Id.) Lane moves to dismiss all of Defendant's counterclaims under Rule 12(b)(6). (R. 65, Mot.; R. 66, Mem.) The motion is now fully briefed. (R. 71, Resp.; R. 73, Reply.)

         LEGAL STANDARD

         A Rule 12(b)(6) motion "challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted." Firestone Fin. Corp. v. Meyer, 796 F.3d 822, 825 (7th Cir. 2015) (citation omitted). In deciding a Rule 12(b)(6) motion, the Court views the complaint in the light most favorable to the plaintiff, accepts all well-pleaded factual allegations as true, and draws all reasonable inference in the plaintiffs favor. Vesely v. Armslist LLC, 762 F.3d 661, 664-65 (7th Cir. 2014). The Court can consider the "allegations set forth in the complaint itself, documents that are attached to the complaint, documents that are central to the complaint and are referred to in it, and information that is properly subject to judicial notice." Willamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013). To survive dismissal, a complaint "must contain sufficient factual matter ... to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 663, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Because federal courts employ notice pleading, rather than fact pleading, a plaintiff is not required to include "detailed factual allegations" to survive dismissal. Alexander v. United States, 721 F.3d 418, 422 (7th Cir. 2013). Instead, "the plausibility requirement demands only that a plaintiff provide sufficient detail to present a story that holds together." Id. (citation and internal quotation marks omitted). Claims of fraud are an exception to this rule, as they must be pled "with particularity." Fed.R.Civ.P. 9(b). This means that the party alleging fraud must describe the "who, what, when, where, and how" of the fraud. Wigod v. Wells Fargo Bank, N.A, 673 F.3d 547, 569 (7th Cir. 2012) (citation omitted).

         ANALYSIS

         I. Breach of Contract (Counts I and III)

         In Count I, Defendant alleges that Plaintiffs' breached the parties' February 2015 agreement by failing to pay him wages and vacation pay he is owed. (R. 51, Answer & Countercl. ¶¶ 7-11.) Under Illinois law, a party asserting breach of contract must plead four elements: (1) the existence of a valid and enforceable contract; (2) performance of the contract by the claimant; (3) a breach by the other party; and (4) injury to the claimant. Hess v. Bresney, 784 F.3d 1154, 1158 (7th Cir. 2015) (citing Henderson-Smith & Assocs. v. Nahamani Family Serv. Ctr., 752 N.E.2d 33, 43 (Ill.App.Ct. 2001)). Contracts "must be construed as a whole, viewing each provision in light of the other provisions." United States v. Rogers Cartage Co., 794 F.3d 854, 861 (7th Cir. 2015) (quoting Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011)). The Court's "primary objective in construing a contract is to give effect to the intent of the parties." Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007). "Unambiguous contract terms must be given their plain and ordinary meaning." QuickClick Loans, LLC v. Russell, 943 N.E.2d 166, 172 (Ill.App.Ct. 2011). A contract is considered ambiguous if it is unclear or susceptible to more than one meaning. Gallagher, 874 N.E.2d at 58. "[W]hether a contract is ambiguous is a question of law." Cent. III. Light Co. v. Home Ins. Co., 821 N.E.2d 206, 214 (Ill. 2004). If a contract term is ambiguous, the Court can consider extrinsic evidence to determine the parties' intent, but this becomes a question of fact that cannot be decided on a motion to dismiss. Bank of Am., N.A. v. Oberman, Tivoli & Pickert, Inc., 12 F.Supp.3d 1092, 1100 (N.D. Ill. 2014) (citing Quake Constr., Inc. v. Am. Airlines, Inc., 565 N.E.2d 990, 994 (Ill. 1990)).

         Defendant alleges that a valid contract exists between the parties, and he includes the agreement as an exhibit. (R. 51, Answer & Countercl. ¶ 8; R. 51-1, Agreement.) He further alleges that he performed his obligations under the agreement, and that Plaintiffs breached the agreement by failing to pay him certain wages and vacation pay. (R. 51, Answer & Countercl. ¶¶ 10, 25.) He claims that he has been damaged in the amount of $12, 750, which by his calculation is the amount he is owed under the agreement. (R. 51, Answer & Countercl. ¶ 10.) Taking these allegations as true, Defendant has adequately alleged a breach of contract claim. See Hess, 784 F.3d at 1158-59.

         Plaintiffs argue, however, that Defendant's claim fails because he is not entitled to the number of vacation days that he claims. (R. 66, Mem. at 2; R. 73, Reply at 1-2.) They argue that under Illinois law, employees earn vacation pay pro rata as they render services to their employer, and by their count, Defendant is entitled to at most seven days of vacation. (R. 66, Mem. at 2.) Plaintiffs cite to Arrez v. Kelly Servs., Inc., 522 F.Supp.2d 997, 1002 (N.D. Ill. 2007), but that case does not support Plaintiffs' position. (See R. 73, Reply at 2.) The contract in Arrez was a "length-of-service" plan, meaning that the employee's vacation time was guaranteed only if he rendered services for a certain period. Arrez, 522 F.Supp.2d at 1002; see also Golden Bear Family Rests., Inc. v. Murray, 494 N.E.2d 581, 582 (Ill.App.Ct. 1986) (employees earned vacation pay pro rata where defendant's vacation policy provided that accrued vacation pay would not be paid to employees terminated within the calendar year).

         In this case, by contrast, the parties' agreement states in plain language that Defendant is "entitled to take twenty-eight (28) days for personal paid vacation time during the fiscal year." (R. 51-1, Agreement ¶ 4.) This provision does not contain any qualification as to how the days accrue or may be used, nor does it contain a length-of-service provision like the policy at issue in Arrez. (Id.) At best the language is ambiguous, and determining what the parties intended when they drafted this provision is an issue of fact that cannot be resolved on a motion to dismiss. Bank of Am., 12 F.Supp.3d at 1100. Accordingly, the Court declines to dismiss on this ground.

         Plaintiffs also argue that Defendant's allegations in Count I are inconsistent because he lists two different totals of the number of days he is owed. (R. 66, Mem. at 2.) It is true that in paragraph ten Defendant states that he is owed for 36 days, whereas in paragraph 19 he alleges that he is owed for 34 days. (R. 51, Answer & Countercl. ¶¶ 10, 19.) Defendant clarifies in his response brief that he meant to claim payment for 34 days; presumably the other number was a scrivener's error. (See R. 71, Resp. at 3.) In any event, this type of minor discrepancy is immaterial. At the pleading stage, Defendant only needs to allege a plausible breach of contract claim, and exact calculations of the damages he is owed under the contract are not required. See Traffic Tech, Inc. v Kreiter, No. 14-cv-7528, 2016 WL 4011229, at *3 (N.D. Ill. July 27, 2016) (rejecting defendant's attack on plaintiffs "arithmetic" used to calculate how much he was owed under the parties' agreement, because "[w]hose calculation is correct is a disputed issue of fact that cannot be resolved at the motion to dismiss stage"); Martin v. Asset Acceptance, LLC, No. 11 CV 6256, 2012 WL 3042524, at *2 (N-D. Ill. July 25, 2012) (observing that when courts decide a Rule 12(b)(6) motion, "the issue is not whether [plaintiff] could prove her damages, but whether she stated a proper claim for relief). Defendant has plausibly alleged that he is owed money under the parties' agreement for work and vacation, and therefore, the motion is denied as to Count I.

         Plaintiffs relatedly argue that Defendant fails to state a claim in Count III, which seeks unpaid fees under this same agreement. (R. 66, Mem. at 5-6.) In Plaintiffs' view, Defendant is not entitled to any fees that were received after he left the firm. (Id.) Defendant disagrees with this interpretation. (R. 71, Resp. at 7.) The parties' agreement provides in pertinent part:

Any Personal Injury settlements/judgments/verdicts shall be allocated in gross within Lane Legal Services, P.C. as follows: 50% to Lane Legal Services, P.C. and 1/3 to NEJLA K. LANE and STEPHEN LE BROCQ, respectively, remainder shall be given to other attorneys ...

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