Elsener v. Brown

ILLINOIS OFFICIAL REPORTS

Appellate Court

Elsener v. Brown, 2013 IL App (2d) 120209

Appellate Court JAMES ELSENER, Plaintiff-Appellee, v. ROY BROWN, Defendant-

Caption Appellant (Brown Business Ledger, LLC, Defendant).

District & No. Second District

Docket No. 2-12-0209

Filed September 10, 2013

Held In plaintiff’s action to recover under his employment contract with the

(Note: This syllabus company created following plaintiff’s sale of the company he created, the

constitutes no part of trial court’s judgment finding that defendant, the president of the

the opinion of the court successor company, was personally liable in his capacity as president of

but has been prepared the successor was affirmed, notwithstanding the fact that defendant’s

by the Reporter of headquarters were in Ohio, where he was also the chief executive officer

Decisions for the of the parent company of the successor, and he only came to Illinois

convenience of the briefly to discuss the purchase of plaintiff’s company, since he had

reader.)

sufficient contacts with Illinois to warrant requiring him to answer

plaintiff’s complaint; furthermore, he failed to raise the claim that he was

not liable under the Wage Payment and Collection Act in the trial court,

he was “in Illinois” for purposes of that Act, and pursuant to the

contractual provision for severance pay, the trial court properly found

defendant permitted a violation of the Act.

Decision Under Appeal from the Circuit Court of Du Page County, No. 10-L-172; the

Review Hon. Patrick J. Leston, Judge, presiding.

Judgment Affirmed.

Counsel on Roy Brown, of Cincinnati, Ohio, appellant pro se.

Appeal

David H. McCarthy III, of Law Offices of David H. McCarthy III, of

Naperville, for appellee.

Panel JUSTICE BIRKETT delivered the judgment of the court, with opinion.

Justices Hutchinson and Spence concurred in the judgment and opinion.

OPINION

¶1 Defendant, Roy Brown, appeals from the trial court’s judgment finding him personally

liable on an employment contract signed by plaintiff, James Elsener, and defendant in his

capacity as president of Brown Business Ledger, LLC (BBL). For the following reasons, we

affirm.

¶2 I. BACKGROUND

¶3 Plaintiff, a former employee of BBL, filed a three-count complaint in February 2010

against both BBL and defendant. Plaintiff alleged that, on June 2, 2008, he signed a contract

with BBL for a three-year term of employment, that he was terminated without cause on

August 18, 2009, and that his contract entitled him to his remaining compensation for the

three-year term. Plaintiff also sought attorney fees and prejudgment interest. In counts I and

II, plaintiff brought claims under the Illinois Wage Payment and Collection Act (Wage Act)

(820 ILCS 115/1 et seq. (West 2010)) against both BBL and defendant. Plaintiff alleged that

defendant was individually liable under the Wage Act because he “controlled [BBL’s]

financial decisions” and “knowingly refused to allow [BBL] to pay [plaintiff] the

compensation owed him ***, *** thereby knowingly permitt[ing] [BBL] to violate the

[Wage Act].” Count III, which apparently was brought against BBL alone, alleged breach of

contract.

¶4 Defendant subsequently moved to dismiss, for lack of personal jurisdiction, the counts

against him. On April 30, 2010, while the motion to dismiss was pending, BBL and its parent

corporation, Brown Publishing Company (BPC), filed a bankruptcy petition in federal court.

On May 3, BBL asserted to the trial court that the proceeding before it was automatically

stayed pursuant to section 362(b)(21) of the Bankruptcy Code (11 U.S.C. § 362(b)(21)

(2006)). On May 4, the trial court stayed the proceedings against BBL alone. On October 11,

BPC and BBL moved the bankruptcy court for an order enforcing the automatic stay against

all proceedings in the trial court. Plaintiff responded that the stay did not apply to the

proceedings against defendant. On November 30, the bankruptcy court entered a stipulated

order lifting the stay in part and permitting plaintiff to “proceed with the Illinois [a]ction

solely against defendant Roy Brown.” The order further provided: “[Plaintiff] has not filed,

-2-

will not file, and forever waives and releases his right to file a proof of claim against [BPC

and BBL] and each of them and their respective estates.”

¶5 On June 25, 2010, the trial court denied defendant’s motion to dismiss for lack of

jurisdiction. Plaintiff later moved for summary judgment, which was denied.

¶6 The trial court conducted a bench trial in August 2010. Defendant renewed his

jurisdictional motion. Plaintiff and defendant were the sole witnesses at trial.

¶7 Plaintiff testified that, in April 1993, he commenced publication of “The Du Page

Business Ledger.” Later, he changed the name to “The Business Ledger” (The Ledger).

Plaintiff was sole owner and manager of The Ledger, which was headquartered in Naperville.

In the spring of 2008, BPC expressed interest to plaintiff about purchasing The Ledger. BPC

was a publishing conglomerate that owned multiple publications throughout the United

States. BPC was headquartered in Ohio, with offices in Cincinnati and Tipp City. Officed

in Cincinnati were defendant, BPC’s president and chief executive officer; Joe Ellingham,

vice president and chief financial officer; and Joel Dempsey, vice president and general

counsel. In May 2008, defendant traveled to Illinois and met with plaintiff in Naperville to

discuss the sale of The Ledger. Subsequently, on May 26, 2008, defendant sent on behalf of

BPC a letter of intent to purchase The Ledger for $900,000 cash plus a three-year contract

of employment for plaintiff. The sale of The Ledger closed in June 2008.

Contemporaneously, BBL was formed in Illinois to operate The Ledger. BBL became a

wholly owned subsidiary of BPC. Admitted into evidence were the articles of organization

for BBL, showing that it was an Illinois limited liability company with its principal place of

business in Naperville. Defendant and Dempsey were appointed BBL’s president and vice

president, respectively. Consistent with the articles of organization, BBL’s business offices

were in Naperville.

¶8 On June 2, 2008, an executive employment contract was entered into between plaintiff

as “Employee” and BBL as “Employer.” Signing for BBL was defendant, designating

himself as the company’s president. The contract installed plaintiff as publisher of The

Ledger, with an employment term of three years and a base salary of $85,000 to be paid in

biweekly installments. Article 3.1 of the contract specified two means by which BBL could

unilaterally terminate plaintiff’s employment prior to the end of the three-year term. BBL

could terminate for “cause” (referred to as “Termination for Cause”) or “for any other reason,

whatsoever, with or without cause, at the sole discretion of [BBL]” (referred to as

“Involuntary Termination”). Article 3.1(i) stated: “It is expressly acknowledged and agreed

that the decision as to whether ‘cause’ exists for termination of the employment relationship

by Employer is delegated to Employer’s President.” Article 6.1 imposed a mandate of

noncompetition that would bind plaintiff “[d]uring the term of this Agreement and for a

period of one (1) year after termination of this Agreement, whether terminated by cause or

otherwise.” Article 3.5 provided:

“Upon an Involuntary Termination of the employment relationship by *** Employer ***

prior to expiration of the Term, Employee shall be entitled, in consideration of

Employee’s continuing obligations hereunder after such termination (including, without

limitation, Employee’s non-competition obligations), to receive his pro rata salary

-3-

through the date of such termination plus the severance amount set forward in Exhibit

A.”

Exhibit A provided, with respect to “Severance,” that “Employee shall be entitled to the

remaining amount of his base salary [$85,000] through expiration of the Contract Term if

he is terminated not for cause.” Article 9 stated that the contract “shall be subject to and

construed under the laws of the State of Illinois.”

¶9 Plaintiff testified that his responsibilities after the sale were much the same as they were

before. Plaintiff was responsible for, inter alia, “sales” and “profitability.” Payroll operations

were moved to Tipp City, and subsequently plaintiff received his biweekly salary payments

from there. During plaintiff’s tenure at BBL, “financial statements and reporting were in

transition to go to Ohio.” Ellingham was plaintiff’s day-to-day “direct report” at BBL.

¶ 10 According to plaintiff, BBL began to incur losses in the fall of 2008 because of the

national economic recession. Plaintiff and Ellingham came under pressure to cut costs at

BBL, and plaintiff made proposals to improve the budget. The losses continued into 2009.

Plaintiff acknowledged, based on financial statements produced by BBL for 2009, that BBL

was running a year-to-date loss of $55,946 as of May 31, 2009.

¶ 11 Plaintiff testified that, on June 24, 2009, he e-mailed Ellingham a financial update for

BBL. The update forecast a cumulative loss of $116,784 for BBL by August 2009. Plaintiff

copied defendant on the e-mail. About an hour later, defendant wrote plaintiff directly:

“These expenses are WAY too high for the environment. I am not going to allow losses to

mount. Please provide a cost reduction plan to get to break even in July.” Defendant copied

Ellingham on the message. According to plaintiff, this was his first direct communication

from defendant during plaintiff’s time at BBL. On the evening of June 24, 2009, plaintiff

sent defendant and Ellingham a cost-savings plan that proposed, inter alia, that all

accounting work be moved to Tipp City and that all salaries (but plaintiff’s) be cut by 20%.

Plaintiff noted that the “largest salary” was his and that there were two years remaining on

his employment contract. Plaintiff asked, “Would you consider buying me out? Perhaps we

can find a win-win.” Unbeknownst to plaintiff, however, defendant had earlier that day e-

mailed Ellingham a note that read: “Elsener needs to be gone ASAP. Need to breakeven [sic]

here and in GSA.” Ellingham’s e-mailed reply was: “Agreed.”

¶ 12 Plaintiff testified that, on August 17, 2009, Ellingham phoned to tell him that BPC had

decided to change publishers for The Ledger, that plaintiff was terminated, and that his

replacement would begin in two days. Plaintiff asked Ellingham about the “severance plan”

in plaintiff’s contract, and Ellingham replied that it was “something *** to discuss with Mr.

Brown.”

¶ 13 Plaintiff subsequently addressed three messages directly to defendant. First, on August

17, plaintiff e-mailed defendant asking how he “plan[ned] to proceed concerning my

employment contract.” Plaintiff received no response. On August 23, plaintiff mailed

defendant a letter reminding him of the August 17 note. Plaintiff also noted that he had yet

to receive written confirmation of his termination. On August 26, Ellingham sent plaintiff

a letter confirming that his last day was August 18. Still having received no word on his

severance payment, plaintiff retained counsel. On December 31, plaintiff’s counsel sent

-4-

defendant a letter by registered mail demanding payment of $156,061.12, representing

plaintiff’s salary for the balance of the three-year contract term. Plaintiff testified that he did

not know whether his counsel ever received a response to this letter. Plaintiff received no

payment from BBL after August 18. In February 2010, plaintiff filed suit against defendant

and BBL.

¶ 14 Plaintiff testified that, after he was terminated, publication of The Ledger continued with

the same frequency as before. Publication even continued after BPC and BBL filed for

bankruptcy in April 2010. Plaintiff admitted that he filed no claim against BBL or BPC in

bankruptcy court. The reason he filed no claim, and in fact agreed to release BBL from any

“proof of claim” (according to the November 30, 2010, stipulated order) was that he did not

want his state court action “sucked into” the bankruptcy proceeding.

¶ 15 Plaintiff acknowledged that, in the event of an “Involuntary Termination” as defined in

the employment contract, he had a one-year noncompetition duty. Plaintiff also

acknowledged that his “continuing obligation [not to compete] would be met with a

continuing payment by [BBL].” Plaintiff assumed that, if BBL were unable to meet its

payroll, BPC would cover the expense because it owned BBL. Plaintiff was unaware,

however, of any “guarantee made by [BPC] to cover the losses of [BBL].” Asked if had “any

evidence that Mr. Brown knowingly refused to pay [the] severance,” plaintiff answered, “No,

I do not. Mr. Brown never responded to anything.”

¶ 16 Defendant testified that he became president and chief executive officer of BPC in

January 2000 and president of BBL in May 2008. Defendant remained in those positions

until his termination at some point during the bankruptcy proceedings. BPC, defendant

recounted, was founded by his grandfather in 1920. Eventually, BPC grew to own 10

separate subsidiaries publishing over 90 newspapers. According to defendant, BPC funded

the operations of these subsidiaries but was not obligated to do so. In a declaration that

defendant filed in bankruptcy court in April 2010, which plaintiff introduced into evidence,

defendant stated that he was “currently responsible for all functions of [BPC’s] management”

and, in his “capacit[ies] as [BPC’s and BBL’s] President and Chief Executive Officer, [was]

familiar with [BPC’s and BBL’s] books and records, financial affairs, business[,] and

operations.”

¶ 17 Defendant claimed that he is a citizen of Ohio and has never lived or voted in, or paid

taxes to, Illinois. Defendant’s sole visit to Illinois in connection with his work for BPC was

the meeting with plaintiff in 2008 to discuss the purchase of The Ledger. Defendant never

traveled to BBL while he was president of that company.

¶ 18 Defendant stated that Dempsey drafted plaintiff’s employment contract in conjunction

with plaintiff’s counsel. Defendant did not know who drafted which provisions. Defendant

denied that plaintiff’s severance was to be paid in a single sum following the termination of

his employment. Rather, the intent was that plaintiff would be paid “over the period of [the]

noncompete period.” This was necessary, defendant explained, to enforce the noncompetition

requirement.

¶ 19 Defendant testified that, shortly after BPC purchased The Ledger and BBL was formed,

the national economy declined. BPC experienced a sharp decline in revenue, necessitating

-5-

“drastic cost reductions” throughout the company and its subsidiaries. On June 24, 2009,

defendant wrote plaintiff an e-mail directing him to devise a plan for BBL to balance its

budget by the end of the next month. Defendant testified that this was his first

communication to plaintiff since the letter of intent in May 2008. Defendant acknowledged

that, later in the day on June 24, he directed Ellingham to terminate plaintiff’s employment.

Asked about article 3.1 of the employment contract, which “delegated” to him the

determination of whether a unilateral termination of plaintiff’s employment was for cause,

defendant replied that the authority was vested in him but that “the call was counsel’s,”

namely Dempsey’s, because “that’s why we have a general counsel.” Defendant could not

recall any conversation he had at BBL or BPC as to whether cause existed for plaintiff’s

termination. Defendant would have relied on Dempsey to review the parties’ respective

obligations under the employment contract and determine whether cause existed. Defendant

also testified that, when a publisher was terminated, the “point person” was Ellingham, who

along with Dempsey would handle any “claims or legal issues [that] arose out of those

terminations.” According to defendant, he handled severance issues concerning only BPC

personnel who reported directly to him.

¶ 20 Defendant testified that, when he received plaintiff’s August 17 e-mail query about the

employment contract, he discussed it with Dempsey and Ellingham because “it was

effectively their responsibility to resolve [the issue] on the contract side.” All defendant

recalled was that he directed Dempsey and Ellingham to “resolve it, if we had the ability.”

Defendant agreed that “basically the issue landed on [his] desk and [he] sent it downstream

to Mr. Dempsey and to Mr. Ellingham.” Defendant had no communication with Dempsey

or Ellingham about the severance issue until defendant received plaintiff’s December 31,

2009, demand letter. Defendant assumed from the letter that plaintiff had not been paid his

severance. As with the August 17 e-mail, defendant forwarded the demand letter to Dempsey

and Ellingham and directed them to resolve it. Defendant testified: “[I]t was not something

that I could resolve. I needed those guys to resolve it.” Defendant himself made no decision

whether to pay plaintiff his severance.

¶ 21 Defendant described the financial condition that BPC was in when plaintiff was

terminated. In the summer of 2009, BPC was losing $300,000 to $400,000 each month.

There were two credit liens on BPC. BPC owed the first-priority lienholder $70 million and

the second lienholder $25 million. On April 13, 2009, the first lienholder declared BPC in

default. On June 5 of that year, the second lienholder declared BPC in default. Defendant

characterized the defaults as “the beginning of the end of [his] control over the affairs of the

company.” On July 20, BPC signed, on behalf of itself and all its subsidiaries, a forbearance

agreement with the first lienholder. Section 3(a) of the agreement required BPC to

“cooperate with and provide prompt and complete access to the Lenders’ financial

advisors, including Huron Consulting Services, LLC (each, an ‘FA’), in order to allow

such financial advisor(s) to assess and monitor Borrowers’ operations, financial position,

cash flow and such other items as any Lender shall require, including but not limited to

access to all of Borrowers’ books and records. Each FA shall be permitted to review all

financial reports to be delivered by the Borrowers ***.”

The agreement specified that it would terminate July 31, 2009, or earlier in case there were

-6-

further defaults. In defendant’s words, the agreement allowed Huron to “come in and

effectively give marching orders to [BPC’s] management on what needed to be done.”

Subsequently, Huron came to BPC and began “looking over [its] shoulder.” Huron’s

“job [was] to come in, do a full assessment of the company, interact with publishers

directly, employees directly, *** have access to all of the company, and then to monitor

and suggest and direct ultimately aspects of the operations of the company, if not

ultimately the operations.”

According to defendant, Huron “interacted directly with just about everybody at [BPC] but

[him].”

¶ 22 Defendant testified that, on August 3, 2009, BPC received notice that the initial period

of the forbearance agreement had expired and that the first lienholder had declined to renew

it. As of that date, according to defendant, the first lienholder could at any time accelerate

the debt and liquidate BPC’s assets. As it happened, the first lienholder relented for several

more months. (Apparently, even after the expiration of the forbearance agreement, Huron

was still reviewing BPC’s financial activities.) After receiving the August 3 notice, BPC

retained bankruptcy counsel and, on its advice, hired its own financial consultant, Mesirow

Financial, to speak with Huron as BPC’s representative. With the retention of Mesirow,

defendant was “frozen out”; he had “no control to pay anything at that point. It had to be

agreed. And without, frankly, [his] input having much, if any, import.” Ellingham became

the point of contact for Mesirow, and defendant was not “access[ed] *** at all in that

process.” Plaintiff’s claim for severance became “one of just a lot of potential claims that

ultimately materialized.”

¶ 23 Defendant testified that, when he received plaintiff’s December 2009 demand letter, he

had no knowledge of whether BPC could pay plaintiff his severance:

“I didn’t know if we had the money and I didn’t know if we were going to file

bankruptcy the next day and I didn’t know what Huron and the banks and/or Mesirow

might allow at any point because, frankly, Mr. Dempsey and Mr. Ellingham were there

[sic] direct points of contact. And I don’t know why it was not ultimately paid, but I

assume someone made a determination in that connection not to pay it at that time. I

directed them to resolve it.”

Defendant claimed that it was not until plaintiff filed suit in February 2010 that defendant

learned that BPC had made a decision not to pay plaintiff his severance.

¶ 24 Defendant acknowledged that, between plaintiff’s termination and the April 2010

bankruptcy filing, “the ongoing business expenses [of BBL] were being paid.” Specifically,

“decisions were being made *** as to who–which creditors were going to be [sic] receive

how much and when.” According to a “summary of schedules” filed in the bankruptcy court,

BPC had assets of $951,073 and liabilities of $101,504,725.81. On May 5, 2010, the

bankruptcy court entered an order finding that it was “essential to [BPC’s and BBL’s]

continued viability” that they “pay their employees and otherwise finance their operations.”

The court therefore permitted BPC and BBL to use their cash collateral in keeping with their

prospective 13-week budget, which allocated an average of $449,000 per week for employee

compensation. Also pursuant to that order, a “chief restructuring officer” was appointed for

-7-

BPC. His function, defendant described, was to “administer the company while in

bankruptcy.” At this point, defendant claimed, he “really didn’t have [a function]” at BPC.

Eventually, defendant was let go from BPC. He had a severance agreement with BPC, but

never received any such payments.

¶ 25 Defendant acknowledged that BBL replaced plaintiff with a new publisher and that

publication of The Ledger continued even after BPC and BBL filed for bankruptcy. The

replacement improved BBL’s financial status, though the company still operated at a loss.

¶ 26 In closing argument, defendant’s threshold contention was that the trial court lacked

personal jurisdiction over him because he was neither “a resident, voter, taxpayer, worker,

[nor] property owner in Illinois.” Defendant also relied on the “fiduciary shield” doctrine

recognized by the supreme court in Rollins v. Ellwood, 141 Ill. 2d 244 (1990). Second,

defendant claimed that, as he was a resident of Ohio, the Wage Act lacked the extraterritorial

reach to bind him. Third, citing Andrews v. Kowa Printing Corp., 217 Ill. 2d 101 (2005),

defendant asserted that, even if the Wage Act applied to him, he was not personally liable

on the severance obligation because he did not knowingly permit BBL’s failure to make the

payment. Defendant claimed that it was reasonable for him to delegate the severance issue

to Ellingham and Dempsey, and that he was not privy to the ultimate decision whether to pay

plaintiff. Notably, defendant did not dispute at trial that plaintiff’s termination was not for

cause and that, at least by the letter of the employment contract, plaintiff was owed severance

pay.

¶ 27 For his fourth argument, defendant asserted that, if he were found liable under the Wage

Act, the trial court should interpret the employment contract as requiring that the severance

payment be rendered not as a single sum but as biweekly installments for the balance of the

three-year term. The timing was important, defendant proposed, because, while that three-

year term was yet unexpired, BPC and BBL filed for bankruptcy and, consequently,

defendant “ha[d] no control over anything” and so could have no further Wage Act liability.

Therefore, defendant argued, he was liable at most for $60,000, the total of the installments

due at the time of the bankruptcy filing. Finally, defendant argued that any damages award

against him must not include interest or attorney fees, as plaintiff waived such awards

pursuant to article 3.5 of the employment contract.

¶ 28 The trial court found for plaintiff, explaining its reasons on the record. First, the court

found that it had personal jurisdiction over defendant:

“Mr. Brown clearly did business in Illinois as a director and officer of an Illinois

company. The contract was formed in Illinois. The negotiations took place in Illinois. All

services under the contract were rendered in Illinois, or virtually all services, and the

contract has been construed pursuant to Illinois law.”

¶ 29 Next, the court held that defendant, as president of BBL and BPC, was ultimately

responsible for seeing that BBL’s contractual obligations were met, and that the

responsibility remained with him despite his efforts to delegate:

“[Defendant] cannot divest himself of responsibility by handing the piece of paper to

somebody else in his immediate employ and saying take care of this. It’s his duty under

[the Wage Act] to take care of it. It was no one else’s duty. It is his duty and his alone as

-8-

provided in [the Wage Act].

***

He personally made the offer of employment. He personally signed the employment

agreement. He personally retained the right to terminate for cause. He received the e-mail

demand. He personally received the demand letter in December [2009]. Although I think

*** that date [of December 31, 2009,] is less significant because I believe the cause of

action arose on August 17[, 2009]. He signed the various pleadings and the statements

in the bankruptcy court indicating that he was responsible for all the function of the

management of this particular company. Apparently, *** he was able to pay various

financial obligations of this particular company. He was the man in charge and made the

decision not to pay [plaintiff]. It was his responsibility to see that that was paid under [the

Wage Act].”

¶ 30 The court also refused to accept that the funds were not available to pay plaintiff:

“You have an income statement that was presented into evidence showing that the

company was losing money. There is no balance sheet. There is no indication of how

much was in the bank account. There is no indication of how much was left on any lines

of credit. There was no indiction of any cash on hand. We know that for a period of

months until April the following year[1] they stayed in business. They paid other

employees and they paid some creditors, presumably as indicated by the financial

statement[;] they simply did not pay [plaintiff], and he was required to be paid under the

statute.

***

I note the forbearance agreement *** does not forbid payments to [plaintiff], which

had been previously earned. Until the time of bankruptcy, it does not appear to me that

the banks or creditors were running the company to the exclusion of Mr. Brown, which

[was] the case in [Andrews].”

¶ 31 The court found that it was only after BPC and BBL filed for bankruptcy that control of

those companies was taken away from management. Before that time, the obligation to pay

severance “remained with the person who was calling the shots and that person was Mr.

Brown.” The court also agreed with plaintiff that the employment contract called for a lump-

sum severance payment upon an “Involuntary Termination.” Accordingly, the court entered

judgment for plaintiff for $158,696.12 plus costs. The court also granted plaintiff leave to

file a fee petition. Plaintiff subsequently filed a petition requesting both attorney fees and

prejudgment interest. While that petition was pending, defendant filed a posttrial motion

reasserting his jurisdictional objection and challenging the application of the Wage Act to

him personally. Defendant also disputed the fee and interest claims as “forbidden by the

parties’ contract.” The court awarded plaintiff $48,921.25 as attorney fees and $15,847.87

as prejudgment interest. In accord with the bankruptcy stay, which had been lifted strictly as

to the action against defendant, no judgment was entered against BBL.

1

The court may have meant 2010 or even 2011.

-9-

¶ 32 Defendant filed this timely appeal.

¶ 33 II. ANALYSIS

¶ 34 A. Personal Jurisdiction

¶ 35 We address first defendant’s contention that the trial court lacked personal jurisdiction

over him.

¶ 36 Personal jurisdiction is “the authority of the court to litigate in reference to a particular

defendant and to determine the rights and duties of that defendant.” In re Possession &

Control of the Commissioner of Banks & Real Estate of Independent Trust Corp., 327 Ill.

App. 3d 441, 463 (2001). Where the trial court makes a jurisdictional determination based

on facts adduced at an evidentiary hearing, we sustain the trial court’s ruling unless it is

against the manifest weight of the evidence. Gaidar v. Tippecanoe Distribution Service, Inc.,

299 Ill. App. 3d 1034, 1039 (1998). “A finding is against the manifest weight of the evidence

only if the opposite conclusion is clearly evident or if the finding itself is unreasonable,

arbitrary, or not based on the evidence presented.” Best v. Best, 223 Ill. 2d 342, 350 (2006).

¶ 37 There are two types of personal jurisdiction: general and specific. Aasonn, LLC v.

Delaney, 2011 IL App (2d) 101125, ¶ 14. General jurisdiction rests on the defendant’s

“continuous and systematic contacts with the state” and can be exercised even where the

cause of action does not arise out of those contacts. Id. Specific jurisdiction does not require

such extensive contacts, but the contacts that do exist must be the basis for the cause of

action. Id. Section 2-209 of the Code of Civil Procedure (735 ILCS 5/2-209 (West 2012))

is known as the Illinois long-arm statute. Subsection (a) of section 2-209 “describes 14

grounds under which specific jurisdiction arises,” while subsection (b) “describes 4 grounds

under which general jurisdiction arises.” Sabados v. Planned Parenthood of Greater Indiana,

378 Ill. App. 3d 243, 246 (2007). Jurisdiction lies under subsection (a) only with respect to

“causes of action arising from [the] acts enumerated [in subsection (a)].” 735 ILCS 5/2-

209(f) (West 2012).

¶ 38 The trial court did not identify the authority upon which it relied. Defendant argues that

there is “only one possible basis” for jurisdiction under the long-arm statute, namely section

2-209(a)(12), which grants jurisdiction over a cause of action arising out of a defendant’s

“performance of duties as a director or officer of a corporation organized under the laws of

this State or having its principal place of business within this State” (735 ILCS 5/2-

209(a)(12) (West 2012)). Defendant denies that jurisdiction lies under subsection (a)(12). In

his response brief, plaintiff relies on that subsection alone.2 Arguing that the requirements

of subsection (a)(12) were not met, defendant asserts that he had no contacts with Illinois as

2

Oddly, plaintiff does not rely on subsection (c), the catchall provision, which states that “[a]

court may also exercise jurisdiction on any other basis now or hereafter permitted by the Illinois

Constitution and the Constitution of the United States.” 735 ILCS 5/2-209(c) (West 2012). That

provision “effectively collapses the jurisdictional inquiry into the single issue of whether a

defendant’s Illinois contacts are sufficient to satisfy federal and Illinois due process.” Russell v.

SNFA, 2013 IL 113909, ¶ 30.

-10-

president of BBL because he “never once traveled to Illinois on [BBL] business, took

corporate action in Illinois, or directed anyone in Illinois to act adversely to plaintiff.” He

contends that “all of [his] actions, including those related to plaintiff’s severance, took place

in Ohio.” We are not persuaded. Jurisdiction under subsection (a)(12) is based simply on acts

done as an officer or director of a corporation organized under Illinois law or having its

principal place of business in this state. The statute accords no significance to where those

acts occur. Defendant was president of BBL, which was organized under Illinois law and

headquartered here as well. Moreover, the conduct that forms the basis for plaintiff’s cause

of action is defendant’s failure, in his capacity as president of BBL, to ensure that the

company paid plaintiff the severance amount owed him under the employment contract. We

hold that the elements of section 2-209(a)(12) were satisfied here.

¶ 39 This does not end our inquiry, for we must still determine whether the exercise of

personal jurisdiction over defendant pursuant to section 2-209(a)(12) comported with due

process principles under the Illinois and federal constitutions. See Rollins, 141 Ill. 2d at 275;

Hanson v. Ahmed, 382 Ill. App. 3d 941, 943 (2008). “The purpose of the Illinois long-arm

statute is to assert jurisdiction over nonresidents to the extent permitted by the due process

clause.” Hanson, 382 Ill. App. 3d at 943. “Thus, the reach of the long-arm statute may lie

within or may touch, but cannot extend beyond, the bounds circumscribed by the

requirements of due process.” Id. Recently, in Russell, 2013 IL 113909, ¶ 32, our supreme

court observed that there have been no recent published Illinois decisions “identifying any

substantive difference between Illinois due process and federal due process on the issue of

a court’s exercising personal jurisdiction over a nonresident defendant.” As the parties in the

case did not claim any substantive difference between Illinois and federal standards

governing personal jurisdiction, the court did not explore the issue further. Rather, the court

proceeded as if the standards were indistinguishable. Id. ¶ 33. Since defendant likewise does

not claim any substantive distinction between Illinois and federal standards, our analysis will

be unitary. We determine whether defendant had “ ‘certain minimum contacts with [Illinois]

such that maintenance of the suit there does not offend “traditional notions of fair play and

substantial justice.” ’ ” Id. ¶ 34 (quoting Wiles v. Morita Iron Works Co., 125 Ill. 2d 144, 150

(1988), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

¶ 40 Defendant relies on two cases as illustrating the boundaries of due process. The first is

Rollins. Sylvester Rollins was stopped in Illinois for a traffic offense. After the stop was

concluded, the police detained him on the mistaken belief that he was a fugitive from

Maryland. After Rollins waived extradition to Maryland, John Ellwood, a Maryland police

officer, transported him from Illinois to Maryland. At some point during the trip, Rollins told

Ellwood that he was not the person whom the Maryland authorities wanted. After his arrival

in Maryland, Rollins was released by a judge. He subsequently sued Ellwood in Illinois state

court for the intentional torts of kidnaping, unlawful restraint, and conspiracy. Rollins, 141

Ill. 2d at 249-52.

¶ 41 The supreme court held that exercising personal jurisdiction over Ellwood in Illinois

would offend due process. The court formally recognized the “fiduciary shield” doctrine as

a part of due process protections. Specifically, the court considered it “unfair and

unreasonable *** to assert personal jurisdiction over an individual who seeks the protection

-11-

and benefits of Illinois law, not to serve his personal interests, but to serve those of his

employer or principal.” Id. at 280. Applying the doctrine to the facts before it, the court said:

“Ellwood entered into Illinois, and while in Illinois engaged in conduct giving rise to the

present cause of action, solely in his capacity as a police officer acting for the Baltimore

police department and the State of Maryland. The nature and quality of his actions in

Illinois were defined and characterized by his status as a police officer employed by these

entities. Because Ellwood’s conduct in Illinois was a product of, and was motivated by,

his employment situation and not his personal interests, we conclude that it would be

unfair to use this conduct to assert personal jurisdiction over him as an individual. Also,

we are not persuaded by the argument, raised by various sources, that asserting personal

jurisdiction over an employee who acted in the scope of his employment is justified

because the employee is serving his own financial interests when he performs the tasks

imposed upon him by his employer. In practical terms, an employee, especially one in

Ellwood’s position, has little or no alternative besides unemployment when ordered to

enter another State to carry out the wishes of his employer.” Id. at 279-80.

¶ 42 Both the First District and the Fifth District Appellate Courts have distinguished Rollins

in circumstances relevantly similar to the present case. In People ex rel. Morse v. E&B Coal

Co., 261 Ill. App. 3d 738 (1994), the State of Illinois sued both Edward Everly and E&B

Coal Co., the Illinois mining corporation of which he was a director, for violations of an

Illinois coal mining statute. The suit was based on actions Everly took as a director of E&B.

(The opinion does not state where Everly resided at the time of suit, but evidently it was not

Illinois.) The Fifth District rejected Everly’s claim that the fiduciary shield doctrine as

applied in Rollins precluded personal jurisdiction over him. The court’s astute analysis bears

quoting at length:

“Clearly, the facts in Rollins are distinguishable from those in the case at bar. The

Rollins court found it very significant that Ellwood’s actions were motivated by his

employment status rather than personal interests and that he had little or no alternative

besides unemployment. In the present case, Everly freely chose to accept a directorship

in E&B, with full knowledge that E&B was an Illinois corporation conducting a mining

operation in Illinois. We find there to be a meaningful difference between Everly’s status

as a corporate director of an Illinois corporation and Ellwood’s status as a Maryland

police officer sent to retrieve Rollins. Based on the analysis used by the Rollins court, we

do not find the fiduciary shield doctrine applicable in this instance. Under Illinois law,

the business and affairs of a corporation are to be managed by its directors. (Ill. Rev.

Stat.1989, ch. 32, par. 8.05 (now 805 ILCS 5/8.05 (West 1992)).) When Everly accepted

his position as director of E&B, he knew or should have known such a position involves

business transactions in Illinois. Furthermore, his position as director of an Illinois

corporation afforded him the full protection of Illinois law in his business interests

related to E&B. To avail himself of the benefits of Illinois law and to then claim Illinois

courts have no personal jurisdiction over him was not a result the Rollins court

envisioned in adopting the fiduciary shield doctrine. Accordingly, we find that the trial

court erred in granting Everly’s motion to dismiss on jurisdictional grounds.” Id. at 747-

48.

-12-

¶ 43 The First District followed Morse in International Business Machines Corp. v. Martin

Property & Casualty Insurance Agency, Inc., 281 Ill. App. 3d 854 (1996) (IBM), where an

Illinois corporation was sued together with Arnold Skoller, its president and director, who

resided outside Illinois. The suit was based on actions Skoller took as president and director

of the Illinois corporation. Citing Rollins, Skoller objected to personal jurisdiction, but the

appellate court found Morse “directly on point.” Id. at 862. The court reasoned that, “[a]s a

director and officer of an Illinois corporation, Skoller tacitly accepted both the duties and

benefits conferred upon him by Illinois,” and that “[h]is position within [the corporation] and

the existence of the Illinois long-arm statute gave fair warning to Skoller that he may one day

be haled into court here for his conduct as an officer and director.” Id.

¶ 44 We distinguish Rollins for essentially the same reasons as Morse and IBM did. Defendant

was personally involved in the acquisition of The Ledger, a newspaper published in Illinois.

Later, when BBL was organized as a limited liability company under Illinois law and availed

itself of this state’s benefits, defendant freely became the company’s first president. In that

capacity, defendant signed an employment contract directing that it would be construed in

accord with Illinois law. While the Maryland police officer in Rollins reasonably would

never have anticipated when he took his job that he would one day be sued in Illinois for

work-related conduct, defendant should have foreseen that he might be called to account in

an Illinois court for his business decisions regarding the Illinois corporation of which he was

president.

¶ 45 Alpert v. Bertsch, 235 Ill. App. 3d 452 (1992), the second case on personal jurisdiction

cited by defendant, was decided four years before IBM by the same division of the First

District. The plaintiff in Alpert sued the directors of a Delaware corporation licensed to

transact business in South Carolina. The plaintiff resided in Illinois but the defendants lived

elsewhere. The plaintiff alleged that he was denied stock options due him under his

employment contract with the corporation. Id. at 455-57. The plaintiff claimed that personal

jurisdiction lay over the defendants because they directed various communications to the

plaintiff in Illinois, including the notice of his termination and their refusal to deliver the

stock. Id. at 459, 461. Without judging the sufficiency of those contacts, the appellate court

held that jurisdiction was absent because the defendants undertook their actions “in their

representative or fiduciary capacity on behalf of the corporation, and not as part of a

conspiracy or secret partnership.” Id. at 461.

¶ 46 As decisions of sister appellate districts, neither Alpert, IBM, nor Morse binds us (see

People v. Damkroger, 408 Ill. App. 3d 936, 944 (2011)), but we believe that the latter two

decisions reflect the better understanding of the fiduciary shield doctrine, namely, that the

mere fact that the defendant has acted in a representative or fiduciary capacity within the

forum state will not preclude the exercise of personal jurisdiction. A sounder reason for the

result in Alpert would have been that the defendants simply lacked sufficient contacts with

Illinois.

¶ 47 Based on the reasoning in IBM and Morse, we hold that the trial court’s jurisdictional

determination is not against the manifest weight of the evidence. Defendant had sufficient

contacts with Illinois such that calling him to answer here did not offend traditional notions

of fair play and substantial justice.

-13-

¶ 48 B. Wage Act Claim

¶ 49 Next, defendant argues that the trial court erred in holding him personally liable on

plaintiff’s claim under the Wage Act. He makes several subpoints, all of which we find to

be without merit.

¶ 50 Section 5 of the Wage Act provides: “Every employer shall pay the final compensation

of separated employees in full, at the time of separation, if possible, but in no case later than

the next regularly scheduled payday for such employee.” 820 ILCS 115/5 (West 2012).

¶ 51 We note that, as at trial, defendant does not dispute that plaintiff was owed severance pay

by the letter of the employment contract.

¶ 52 1. Liability of BBL

¶ 53 Defendant first argues that he cannot be held liable under the Wage Act because there has

been no finding that BBL is liable under the Wage Act. He says:

“[T]he lower court cannot find [that] Defendant ‘knowingly permitted’ a violation of [the

Wage Act] by BBL without a finding that BBL violated the Act. Put differently, a finding

of a violation of [the Wage Act] by an employee’s employer is a necessary element to

finding that the employer’s officer ‘knowingly permitted’ that violation.”

Plaintiff submits that defendant forfeited this contention by failing to raise it in his posttrial

motion. A posttrial motion, however, is not necessary to preserve issues in an appeal from

a bench trial. See Ill. S. Ct. R. 366(b)(3)(ii) (eff. Feb. 1, 1994) (“Neither the filing of nor the

failure to file a post-judgment motion limits the scope of review.”). What caused the

forfeiture here, rather, is defendant’s failure altogether to raise the contention below, whether

at trial or in his posttrial motion. “It is well settled that issues not raised in the trial court are

deemed waived and may not be raised for the first time on appeal.” Haudrich v. Howmedica,

Inc., 169 Ill. 2d 525, 536 (1996); see also Bridges v. Neighbors, 32 Ill. App. 3d 704, 707

(1975) (Rule 366(b)(3)(ii) does not excuse total failure to raise the issue in the trial court).

¶ 54 2. Defendant’s Ohio Residency

¶ 55 Defendant’s next contention is that the Wage Act does not reach him because he is an

Ohio resident and, despite being president of BBL, an Illinois company, he had little or no

contact with Illinois in that capacity.

¶ 56 Section 1 of the Wage Act states that it “applies to all employers and employees in this

State, including employees of units of local government and school districts, but excepting

employees of the State or Federal governments.” (Emphasis added.) 820 ILCS 115/1 (West

2012). Section 2 defines “employer” to include

“any individual, partnership, association, corporation, limited liability company, business

trust, employment and labor placement agencies where wage payments are made directly

or indirectly by the agency or business for work undertaken by employees under hire to

a third party pursuant to a contract between the business or agency with the third party,

or any person or group of persons acting directly or indirectly in the interest of an

-14-

employer in relation to an employee, for which one or more persons is gainfully

employed.” 820 ILCS 115/2 (West 2012).

Section 13 states: “[A]ny officers of a corporation or agents of an employer who knowingly

permit such employer to violate the provisions of this Act shall be deemed to be the

employers of the employees of the corporation.” 820 ILCS 115/13 (West 2012).

¶ 57 As we read the interplay of these provisions, any “employer,” whether person or entity,

must be “in this State” for the Wage Act to apply. See Glass v. Kemper Corp., 920 F. Supp.

928, 931 (N.D. Ill. 1996) (“In plain, grammatically correct English, then, the Wage Act

applies to a group consisting of employers and employees, all of whom are in Illinois.”).

¶ 58 This is not to say, however, that an officer or agent must be physically present in Illinois

in order to be regarded as “in this State.” The meaning of a statute is a question of law, which

we review de novo. See Mashal v. City of Chicago, 2012 IL 112341, ¶ 21. The phrase “in this

State” is not defined in the Wage Act. The only guidance we have found in Illinois case law

is our decision in Khan v. Van Remmen, Inc., 325 Ill. App. 3d 49 (2001).

¶ 59 The plaintiff in Khan brought a Wage Act claim against both his former employer, a

temporary placement agency named Van Remmen, Inc. (VRI), and its president, Thomas

Haynes. The plaintiff was an Illinois resident, while VRI was headquartered, and Haynes

resided, in Wisconsin. The plaintiff alleged that the defendants unlawfully withheld wages

that the plaintiff earned through a Wisconsin placement that VRI arranged. The trial court

dismissed the action for lack of personal jurisdiction. On appeal, the plaintiff argued that

jurisdiction was proper because the defendants committed a tort, namely a Wage Act

violation, in Illinois. See 735 ILCS 5/2-209(a)(2) (West 2012) (jurisdiction exists over a

cause of action arising from “[t]he commission of a tortious act within this State”).

Consequently, this court had to determine whether the plaintiff adequately pled the elements

of a Wage Act violation by the defendants. We held that the pleadings and affidavits on file

did not suggest that VRI and Haynes were “employers *** in this State” (820 ILCS 115/1

(West 2012)). We reasoned:

“The fact that VRI placed four individuals with Illinois companies over a five-year period

does not change our conclusion. VRI had its principal place of business in Wisconsin,

had no physical presence in Illinois, and did not place plaintiff with an Illinois company.”

Khan, 325 Ill. App. 3d at 60.

We cautioned, however, that we were “not purport[ing] to create an all-encompassing

definition of ‘employers in this State’ for purposes of the Wage Act,” but rather were

“determin[ing] only that under the circumstances of this case plaintiff has not pleaded any

facts from which we could conclude that VRI or Haynes was an employer in this state.” Id.

at 60-61.

¶ 60 If it had been dispositive in our minds that VRI had neither its principal place of business

nor a physical presence in Illinois, we would not have also mentioned that VRI “did not place

plaintiff with an Illinois company.” Since we did mention it, and also declined to provide a

general definition of “employers *** in this State” under section 1, we left open the

possibility that a corporation with no headquarters or physical presence in Illinois can still

qualify as an “employer” under the Wage Act. By analogy, an officer or agent who has had

-15-

little or even no physical presence in Illinois in the course of his business duties can,

nonetheless, be deemed “in this State.” Though we abstain from offering a comprehensive

definition of the phrase “in this State” as applied to individuals, we hold that the core concept

is met on these particular facts. Although defendant was physically located in Ohio, his

offices there were part of the operational center of a publishing conglomerate that included

multiple subsidiaries, one of which was BBL. BBL had its principal place of business in

Illinois, with defendant as its president.

¶ 61 Defendant claims that his role as BBL’s president was “passive,” but he cites nothing in

the record to support this. Moreover, his April 2010 declaration to the bankruptcy court

described his duties as more robust. Defendant stated therein that he was “currently

responsible for all functions of [BPC’s] management.” The evidence at trial confirms the

natural inference that defendant had ultimate oversight of BPC’s subsidiaries, including

BBL. Plaintiff reported to Ellingham, who reported to defendant. Defendant’s intent for a

closer connection to BBL is witnessed by his becoming its president rather than remaining

as simply president of BPC. Defendant testified that, as part of his responsibilities, he would

receive financial reports from BPC’s subsidiaries. Consistent with this, defendant affirmed

in the bankruptcy declaration that, “[i]n his capacity as [BPC’s and BBL’s] President and

Chief Executive Officer, [he was] familiar with [BPC’s and BBL’s] books and records,

financial affairs, business[,] and operations.”

¶ 62 Our holding has some additional support in Adams v. Catrambone, 359 F.3d 858, 863

(7th Cir. 2004), where the Seventh Circuit Court of Appeals held 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.” The plaintiff in Adams was a Michigan resident who had been

employed by an Illinois corporation as a salesperson. The plaintiff did “substantial work” for

the corporation, and “[m]ost of that work took place in Illinois.” Id. at 861. The court found

that the Wage Act did not provide that covered employees must be residents of Illinois. Id.

at 862-63. Adams is unclear, however, as to what kind of contact a nonresident employee

must have with Illinois in order to be considered “in this State”; the court did not specify

whether the “work” the plaintiff performed in Illinois involved his actual physical presence

in this state. Regardless, Adams at least stands for the proposition that nonresident employees

are not outside the Wage Act’s coverage. As the Adams court found no residency

requirement for employees, so we find no residency requirement for employers.

¶ 63 Our holding recognizes the reality that today’s communications technology permits

managers to achieve a virtual presence between states. Not only was defendant president and

CEO of BPC, BBL’s parent company, but he showed an intent to assume closer control of

BBL by becoming its president, as well. BBL did extensive business in this state by

publishing a local newspaper. As we implied in Khan, the phrase “in this State” does not

exclude entities physically situated outside Illinois. No such restriction exists with regard to

individuals, either. We hold that defendant was “in this State” as contemplated by section 1

of the Wage Act.

-16-

¶ 64 3. Defendant’s Knowing Permission of a Wage Act Violation

¶ 65 As noted, section 13 of the Wage Act states: “[A]ny officers of a corporation or agents

of an employer who knowingly permit such employer to violate the provisions of this Act

shall be deemed to be the employers of the employees of the corporation.” 820 ILCS 115/13

(West 2012). In Andrews, the supreme court arrived at a concept of “knowing permission”

under section 13. We will sustain the trial court’s application of that standard to the facts at

hand unless the court’s determinations are against the manifest weight of the evidence.

Ashley v. IM Steel, Inc., 406 Ill. App. 3d 222, 235 (2010).

¶ 66 The Wage Act distinguishes two kinds of “employers”: (1) those who are “employers”

by virtue of section 5 of the Wage Act because, by contract or agreement, they owe the

employee compensation; and (2) those who are “employers” by virtue of section 13 of the

Wage Act because they are officers or agents who “knowingly permit” the contractually

obligated section 5 employer to withhold the compensation. See Andrews, 217 Ill. 2d at 107-

09. Section 5 employers cannot claim inability to pay as a defense. Id. at 107 (the duty of

contractually obligated employers under section 5 to pay compensation is “strict, with no

consideration given to the *** ability to effectuate compliance”); see also Andrews v. Kowa

Printing Corp., 351 Ill. App. 3d 668, 676 (2004) (“Section 5 of the Wage Act does not

require that plaintiffs prove that the [section 5] employer wilfully failed to pay the final

compensation. It is enough, according to the statute, that plaintiffs were simply not paid by

the next regularly scheduled payday after separation.”). Section 13, however, “reserves

personal Wage Act liability for those individual decisionmakers who knowingly permitted

the Wage Act violation” by the section 5 employer. Andrews, 217 Ill. 2d at 109. Accordingly,

where a section 5 employer lacks the ability to pay the compensation, its officers and agents

cannot be said to have “knowingly permit[ted]” the Wage Act violation. Permission under

section 13 implies ability to arrange payment by the section 5 employer; hence, where

payment is impossible, permission is impossible. See Ashley, 406 Ill. App. 3d at 242 (“a

corporation’s inability to pay employees eliminates any possibility that the [section 13]

employer acted wilfully when failing to compensate employees, thereby negating liability

under the [Wage Act]”).

¶ 67 In the court below, defendant made the twofold argument (1) that he delegated to

subordinates the posttermination matters concerning plaintiff and thereafter lacked

knowledge of whether BBL paid plaintiff his severance; and (2) that, in any case, BBL lacked

the financial ability to pay plaintiff his severance. On appeal, defendant raises only BBL’s

ability to pay. He claims that this case is similar to Andrews.

¶ 68 The defendants in the Wage Act suit in Andrews were Kowa Printing Corporation and

its sole officer and director, Thomas Kowa. In 1996, Kowa Printing suffered a sharp financial

decline and subsequently was given a default notice by its only secured creditor, BankIllinois.

For a time, BankIllinois agreed to forbear. In March 1998, Thomas Kowa executed an

agreement for the peaceful surrender of Kowa Printing’s assets in the event of foreclosure.

In the months that followed, Thomas Kowa found a potential buyer for the company, but

negotiations foundered on the matter of the buyer’s responsibility for the accrued vacation

time of Kowa Printing’s employees. On April 16, 1998, the employees’ union rejected the

potential buyer’s second purchase offer. Andrews, 217 Ill. 2d at 104-05. A few hours later,

-17-

BankIllinois “foreclosed on the loans, seized the Kowa Printing facility, and sent plaintiffs

home.” Id. at 105. “From that point forward,” Thomas Kowa “had [no] access to Kowa

Printing’s assets or accounts.” Id. The plaintiffs, union employees of Kowa Printing, sued

because they were not paid their final vacation and severance pay. Id. The issue on appeal

was whether Thomas Kowa was liable as a section 13 employer. The supreme court held that

he was not:

“At the time of plaintiffs’ separation from Kowa Printing, Thomas Kowa was no longer

in control of Kowa Printing. Plaintiffs’ employment was terminated on April 16, 1998,

after BankIllinois seized Kowa Printing and all of its assets. At this point, BankIllinois

was calling the shots, and a violation of section 5 simply was not within Thomas Kowa’s

ability to permit, knowingly or otherwise.” (Emphasis omitted.) Id. at 112-13.

The court also rejected the plaintiffs’ suggestion that Thomas Kowa acted wilfully in

retaining them as employees despite the inevitability of Kowa Printing’s seizure by creditors.

The court disagreed that Kowa Printing’s fate was inevitable and found that Thomas Kowa

“made every effort to ensure that plaintiffs’ livelihoods survived Kowa Printing’s unexpected

financial downturn.” Id. at 114.

¶ 69 Defendant’s argument here ties in with his position as to when plaintiff’s severance was

required to be paid. According to defendant, plaintiff was not entitled to a single-sum

payment of the salary owed him for the balance of his three-year employment term. Rather,

plaintiff “should have been paid his base salary of $85,000 on a biweekly basis until his non-

compete had run.” After the one-year noncompetition term expired, plaintiff would be

“entitled to a lump sum.” Defendant’s primary stance is that he is not liable at all because,

at the time plaintiff was terminated, BBL was “insolvent” and unable to pay his severance.

Defendant alternatively contends that in no case was BBL able to pay the severance past the

April 2010 bankruptcy filing.

¶ 70 The trial court found (1) that the employment contract required that the severance amount

be paid as a single sum, which under the Wage Act was due “no *** later than the next

regularly scheduled payday” for plaintiff (820 ILCS 115/5 (West 2012)), in September 2009;

and (2) that only with the bankruptcy filing in April 2010 did BBL lose control over its assets

and defendant no longer have the ability to permit a violation of section 5. Consequently, the

court determined that defendant “knowingly permit[ted]” (820 ILCS 115/13 (West 2010))

the Wage Act violation that occurred in September 2009, and the court entered judgment

against defendant for the full $156,696.12 owed for the remaining contract term.

¶ 71 On the contract interpretation issue, our aim is to “ascertain and give effect to the intent

of the parties.” Allianz Insurance Co. v. Guidant Corp., 387 Ill. App. 3d 1008, 1027 (2008).

“The best indication of the parties’ intent is the language of the contract itself.” Id. The

construction of a contract presents a question of law, which we review de novo. Gallagher

v. Lenart, 226 Ill. 2d 208, 219 (2007).

¶ 72 Defendant points to article 3.5 of the employment contract, which states:

“Upon an Involuntary Termination of the employment relationship by either Employer

or Employee prior to expiration of the Term, Employee shall be entitled, in consideration

of Employee’s continuing obligations hereunder after such termination (including,

-18-

without limitation, Employee’s non-competition obligations), to receive his pro rata

salary through the date of such termination plus the severance amount set forward in

Exhibit A.” (Emphasis added.)

Relying on the italicized language, defendant submits that the only effective means to

enforce the noncompetition requirement, for which the pro rata payment and severance

amount were given as consideration, was for BBL to pay plaintiff “on a continuing basis”

throughout the noncompetition term. Against the trial court’s construction of the contract,

defendant notes that “[t]he term ‘lump sum’ is nowhere in the contract.” This criticism is odd

given that defendant’s own reading of the contract contemplates a lump sum. According to

defendant, plaintiff was to be paid the remaining balance under the contract in biweekly

installments (the same schedule for salary payments as if he were still employed) until the

end of the noncompetition period, at which point he would receive an aggregate sum for the

remaining balance. Defendant’s interpretation would require the same degree of textual

manipulation of which he accuses the trial court. Nor can we say that his proposed

construction is necessary lest the noncompetition clause be rendered a nullity. The clause

may be enforced by an action to recoup all or part of the lump-sum severance amount paid

upon “Involuntary Termination.”

¶ 73 We also note that defendant points to plaintiff’s testimony at trial that his “continuing

obligation [not to compete] would be met with a continuing payment by [BBL].” Defendant

implies that this is a damaging admission, but cites no authority by which we can accord

legal significance to it.

¶ 74 We conclude that, under the terms of the contract, plaintiff was owed the sum of

$156,696.12, which the Wage Act required to be paid “no *** later than the next regularly

scheduled payday for such employee” (820 ILCS 115/5 (West 2012)).

¶ 75 Next, we uphold the trial court’s determination that defendant knowingly permitted BBL

to withhold the single-sum payment due upon plaintiff’s termination. First, we sustain the

trial court’s determination that BBL had the ability to pay the severance amount by the next

regularly scheduled payday for plaintiff, which was in September 2009. Defendant appears

to argue that we cannot consider whether BPC had the funds to meet the expenses of its

subsidiary, BBL. Defendant asserts that “BPC was under no obligation, legal or otherwise,

to fund BBL’s losses,” and that plaintiff lodged no Wage Act claim against BPC. Defendant,

however, made no clear divide between BPC’s and BBL’s finances at trial. For instance, his

means for contesting the Wage Act claim below was to introduce evidence of how BPC lost

financial autonomy once the July 20, 2009, forbearance agreement was signed. Defendant

cannot now urge us to distinguish the financial states of BBL and BPC.

¶ 76 Defendant also claims that this case is similar to Andrews because, at the time plaintiff

was terminated, BBL was suffering heavy financial losses. As the trial court noted, however,

BBL continued to pay business expenses, including payroll, in the wake of plaintiff’s

termination. Defendant acknowledged this in his trial testimony, but claimed that, in August

2009, BBL ceded control of its finances to Huron, the financial consultant placed at BBL by

the first lienholder, and to Mesirow, BBL’s own financial consultant. The record, however,

contains no evidence, apart from defendant’s testimony, that BBL lost its autonomy before

-19-

filing for bankruptcy. Defendant claimed in his testimony that the July 2009 forbearance

agreement allowed Huron to give “marching orders” to BPC (here, as noted above, defendant

treats BBL and BPC as interchangeable), but, as the trial court correctly noted, the agreement

by its terms called for Huron to “assess and monitor” BPC’s finances. There is no language

granting Huron control of those finances. It was within the trial court’s province to discount

defendant’s testimony and conclude that BBL did have discretion to pay plaintiff but chose

to allocate resources elsewhere. Andrews is patently distinguishable, as there the company

indisputably lost all control of its assets before the plaintiffs were terminated. See Andrews,

217 Ill. 2d at 112-13.

¶ 77 Second, defendant does not dispute that he was aware of BBL’s Wage Act violation. The

evidence leaves no doubt of notice. Twice in August 2009, plaintiff inquired directly of

defendant what he intended regarding the severance pay. In December 2009, plaintiff wrote

defendant demanding the severance pay. Defendant disputes, however, that he himself had

the ability to arrange for the payment. He states:

“The lower court’s holding that Defendant as president of BBL somehow maintained

control of BBL’s cash *** is manifestly against the record. Plaintiff specifically

recommended that ‘all accounting work’ be transitioned from his wife in Illinois to Tipp

City to improve profitability for which his employment agreement would pay him

handsomely. At all times he worked with Mr. Ellingham and member-manager BPC to

accomplish this goal.”

The question, however, is not who routinely handled BBL’s disbursements. The question is

whether defendant had the authority to direct the severance payment once he was made aware

that the obligation was outstanding. The evidence establishes that he did have such authority

as president of BBL.

¶ 78 Finally, defendant suggests that plaintiff’s Wage Act claim lacks merit because “[he]

himself ran BBL into the ground.” This point has no merit. Whatever plaintiff’s performance

as publisher, defendant did not claim at trial that his termination was for cause. Therefore,

plaintiff was owed severance under the terms of the employment contract.

¶ 79 For the foregoing reasons, we uphold the trial court’s determination that defendant

knowingly permitted BBL to violate the Wage Act.

¶ 80 C. Attorney Fees and Interest

¶ 81 Defendant’s final contention is that the trial court erred in awarding plaintiff attorney fees

and prejudgment interest. Plaintiff claims that defendant forfeited this contention by failing

to raise it in his posttrial motion. In fact, defendant’s posttrial motion did contain a specific

objection to plaintiff’s request for attorney fees and interest. Also, defendant had argued at

trial that plaintiff’s recovery should be strictly limited to the sums specified in the

employment contract. Therefore, defendant preserved this contention for appeal.

¶ 82 The statutory authority for the award of prejudgment interest was section 2 of the Interest

Act (815 ILCS 205/2 (West 2012)), which prescribes an award of interest on “all moneys

after they become due on any *** instrument of writing.” The authority for the award of

attorney fees was section 1 of the Attorneys Fees in Wage Actions Act (705 ILCS 225/1

-20-

(West 2012)), which provides:

“Whenever a[n] *** employee brings an action for wages earned and due and owing

according to the terms of the employment, and establishes by the decision of the court

or jury that the amount for which he or she has brought the action is justly due and

owing, and that a demand was made in writing at least 3 days before the action was

brought, for a sum not exceeding the amount so found due and owing, then the court

shall allow to the plaintiff a reasonable attorney fee of not less than $10, in addition to

the amount found due and owing for wages, to be taxed as costs of the action.”

Aside from contesting the underlying liability, defendant does not dispute that plaintiff met

the qualifications in these provisions. Defendant argues, rather, that the awards were

precluded by article 3.5 of the employment contract, which sets forth the severance amount

due plaintiff in the event of an “Involuntary Termination” and further states:

“Employee’s rights under this Section 3.5 are Employee’s sole and exclusive rights

against Employer or its affiliates, and Employer’s sole and exclusive liability to

Employee under this Agreement, in contract, tort, or otherwise, for any Involuntary

Termination of the employment relationship. Employee covenants not to sue or lodge any

claim, demand or cause of action against Employer for any sums for Involuntary

Termination other than those sums specified in this Section 3.5.”

¶ 83 Defendant believes that the foregoing language constitutes a contractual waiver of

plaintiff’s right to seek attorney fees and interest. We disagree. Defendant cites the rule that

“[i]ndividuals generally may waive substantive rules of law, statutory rights, and even

constitutional rights enacted for their benefit.” In re Estate of Ferguson, 313 Ill. App. 3d 931,

937 (2000). The waiver must be “knowing, voluntary, and intentional.” Id.

¶ 84 A recent case from the First District Appellate Court, Village of Bellwood v. American

National Bank & Trust Co., 2011 IL App (1st) 093115, illustrates the requirements for the

knowing, voluntary, and intentional relinquishment of a statutory right. The plaintiff

municipality brought an eminent domain action to acquire certain parcels of property. In the

course of the litigation, the plaintiff and the property owners filed with the trial court

stipulated judgment orders reciting the amount of compensation to be paid for the parcels and

stating that the orders were final and conclusive and that the parties waived their rights to

appeal. Id. ¶¶ 1-5. Before submitting the agreed compensation, however, the plaintiff

changed its mind and moved to abandon the eminent domain proceeding. Id. ¶¶ 6-7. The trial

court denied the motion. Id. ¶ 7.

¶ 85 The appellate court reversed, finding (1) that the plaintiff had a statutory right to abandon

the eminent domain action prior to taking possession of the parcels; and (2) that the

stipulated judgment orders did not constitute a waiver of that right. Id. ¶¶ 21-25. On the

waiver issue, the court said:

“[T]he agreed orders made no reference to the statutory right to abandon or that [the

plaintiff] specifically waived that right. The only intentional relinquishment of a known

right was the right of either party to contest the substance of the agreed orders. At oral

arguments the agreed orders were referred to as ‘heavily negotiated documents.’ Had the

parties intended for [the plaintiff] to waive its statutory right to abandon, a provision

-21-

stating such should have been included. The absence of any reference to the

abandonment statute in the agreed orders leads to the conclusion that, in this case, the

agreed orders in no way precluded [the plaintiff’s] abandonment of the eminent domain

proceeding. Had the agreed orders included a waiver of [the plaintiff’s] right to abandon

the eminent domain proceeding, we would have reached a different conclusion. However,

that is not the case that is before this court.” Id. ¶ 25.

Likewise here, the employment contract was the result of negotiations. For instance,

defendant testified that he originally proposed a noncompetition term of five years but that

a shorter term was ultimately agreed on. Following the reasoning in Village of Bellwood, we

assume that, if the parties had intended to preclude plaintiff from seeking attorney fees or

interest, that intention would have been overtly expressed in the employment contract. No

such manifestation of intent appears in the uniformly general language above. Accordingly,

we hold that the trial court did not err in awarding attorney fees and interest.

¶ 86 III. CONCLUSION

¶ 87 For the foregoing reasons, we affirm the judgment of the circuit court of Du Page County.

¶ 88 Affirmed.

-22-