Koules v. Euro-American Arbitrage, Inc.

No. 2--97--0145
_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
_________________________________________________________________

STEVEN KOULES, ) Appeal from the Circuit Court
) of Lake County.
Plaintiff-Appellant, )
) No. 95--L--1143
v. )
)
EURO-AMERICAN ARBITRAGE, INC., ) Honorable
) Terrence J. Brady,
Defendant-Appellee. ) Judge, Presiding.
_________________________________________________________________

JUSTICE DOYLE delivered the opinion of the court:
Plaintiff, Steven Koules, appeals from a circuit court order
that granted summary judgment against him and in favor of
defendant, Euro-American Arbitrage, Inc. Plaintiff's amended
complaint claimed that defendant owed plaintiff (1) part of a
guaranteed salary and (2) compensation for vacation benefits
pursuant to a written employment contract.
In May 1993, plaintiff began employment with defendant as an
equity derivative trader. Plaintiff had the status of a vice-
president and worked in defendant's Chicago office. Before
defendant hired him, plaintiff worked in New York.
By January 1994, plaintiff had become concerned about
defendant's long-term commitment to its Chicago office. Plaintiff
communicated this concern to defendant's management and the
management of defendant's parent companies, Banque Internationale
de Placement (BIP) and Dresdner Bank (Dresdner).
On February 3, 1994, plaintiff and defendant entered into a
new employment contract which was effective January 31, 1994 (the
employment contract). Under the employment contract, defendant
promoted plaintiff to senior vice-president and placed plaintiff in
charge of trading in its Chicago office. Plaintiff continued to do
his own trading, but was also given the responsibility to supervise
the trading activities of other traders.
The employment contract specified that plaintiff was entitled
to "4 weeks paid vacation." Plaintiff was also entitled to an
annual draw of $200,000 which was to be deducted from an annual
bonus payable on January 31 of the following year. The annual
bonus was based on certain percentages of profits realized from
plaintiff's own trading activities and from the trading activities
of the traders that plaintiff supervised.
The employment contract also specified that it was for a two-
year period and that defendant guaranteed plaintiff an annual
minimum salary of $250,000. The employment contract clarified
these terms as follows:
"That means that if we were to ask you to leave our company
without cause during that period of time, you would be
compensated so that you would have received this floor
guarantee. If we terminate you for cause or in the case
[sic] you decide to resign from our company, you will no
longer receive your salary payments."
On July 25, 1994, plaintiff sent a letter to Dominique Ould-
Ferhat, defendant's managing director, at his office in Paris,
France. The letter stated:
"Please find my enclosed resignation as Head of Trading.

I understand this implies my loss of the percentage of
trading desk P&L and the rescinding of my salary guaranty
for this and next year. Should you wish, I will continue in
the capacity of an equity derivative trader as long as the
original conditions which pertained to my personal trading
compensations and conditions of employment that applied
until this point shall continue through the end of the
year."
In response to the July 25 letter, defendant flew plaintiff to
Paris. In Paris, plaintiff met with Ould-Ferhat and managers in
defendant's parent organization. They advised plaintiff that they
would address his concerns and convinced plaintiff to withdraw his
resignation and continue as the head of trading in defendant's
Chicago office.
On October 27, 1994, plaintiff sent another letter to Ould-
Ferhat. The October 27 letter stated, in relevant part:
"Morale continues to deteriorate here, and I no longer wish
to continue in my responsibilities as trading manager. I
will continue as equity derivative trader as described in
the letter in which I originally resigned as trading
manager."
In response to the October 27 letter, Ould-Ferhat came to
Chicago and met with plaintiff. Plaintiff testified in a
deposition that Ould-Ferhat told him at the meeting that it had
been decided to close the Chicago office and that Ould-Ferhat would
be meeting in the future with individual employees, including
plaintiff, to finalize things.
Ould-Ferhat and plaintiff met again on November 11, 1994.
Plaintiff testified that Ould-Ferhat handed him a first draft of a
letter agreement regarding plaintiff's employment with defendant.
This first draft offered plaintiff $60,000 in severance
compensation. Plaintiff testified that he told Ould-Ferhat that
$60,000 was "no where near the magnitude of what I felt it should
have been according to my contract." Plaintiff further testified
that Ould-Ferhat then had the severance figure changed to $100,000
and told plaintiff that was the best that defendant could do.
The November 11 letter agreement advised plaintiff that "at
this time, it is not possible to make any final decision with
regard to your personal [employment] situation." However,
plaintiff testified in his deposition that Ould-Ferhat made it
clear to plaintiff that defendant did not plan to offer plaintiff
another position.
The November 11 letter agreement also stated:
"In the event we are unable to propose you [sic] a position
that is compatible with your qualifications and background
in our Group and acceptable to you, we are ready to provide
you with a severance compensation, amounting $100,000 [sic],
paid in the form of a lump sum. This severance compensation
would be paid as soon as all your existing [trading]
positions are totally and properly closed.

Should you accept this severance compensation, we would
require from you that you renounce to engage into [sic] any
kind of legal action against BIP, Dresdner Bank and/or any
of their affiliated companies, provided that your 1994 Bonus
has been totally paid."
Plaintiff acknowledges that he signed the November 11 letter
agreement during his meeting with Ould-Ferhat. Defendant
subsequently gave plaintiff a check dated November 21, 1994, in the
amount of $459,687.25. According to statements made by Ould-Ferhat
in an affidavit, the check represented the after-tax amount that
defendant owed plaintiff for his 1994 bonus plus the $100,000 lump
sum severance payment referred to in the letter agreement. Thus,
in defendant's view, the check represented all defendant owed
plaintiff. Plaintiff cashed the check.
In his amended complaint, plaintiff claimed that the amount
defendant offered him in the November 11 letter agreement was less
than the amount defendant owed him under the employment contract.
Plaintiff claimed that, in addition to the amount defendant offered
him, he was entitled to (1) $150,000, the difference between the
$250,000 minimum salary defendant owed him for 1995 and the
$100,000 lump sum severance payment he received; and (2)
$20,833.33, the value of four weeks of paid vacation due him for
1994. The amended complaint states that plaintiff signed the
November 11 letter agreement even though defendant owed plaintiff
more than it offered him because plaintiff feared that if he did
not sign the letter agreement and accept the offer defendant would
not pay him anything.
In count I of his amended complaint, plaintiff claimed that
defendant breached the employment contract by not paying plaintiff
all he was owed under the contract. Count II claimed that
defendant violated the Wage Payment and Collection Act (Wage
Payment Act) (820 ILCS 115/1 et seq. (West 1996)) by failing to pay
plaintiff the vacation pay he was entitled to upon the termination
of his employment with defendant.
In support of its motion for summary judgment, defendant
argued that the November 11 letter agreement signed by plaintiff
was either a release, an accord and satisfaction, or a covenant not
to sue which barred plaintiff's action against defendant.
Defendant also asserted that plaintiff was not entitled to 1994
vacation pay because he took more than four weeks vacation while
being paid in 1994. In addition, defendant maintained that, even
if plaintiff had not taken his 1994 vacation time, the lump sum
severance payment would more than compensate plaintiff for any
vacation time due him and was an acceptable means of payment under
the Wage Payment Act.
The trial court entered an order granting defendant's motion
for summary judgment. Plaintiff's timely appeal followed.
In all cases of summary judgment, a reviewing court conducts
a de novo review of the evidence in the record. Espinoza v. Elgin,
Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 113 (1995). Summary
judgment is appropriate where "the pleadings, depositions, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law." 735
ILCS 5/2--1005(c) (West 1996); Allegro Services, Ltd. v.
Metropolitan Pier & Exposition Authority, 172 Ill. 2d 243, 256
(1996). While a plaintiff opposing a motion for summary judgment
need not prove his case at the summary judgment stage, to survive
the motion for summary judgment he must present a factual basis
that would arguably entitle him to judgment. Allegro, 172 Ill. 2d
at 256.
We will separately address the questions of whether defendant
owed plaintiff part of the guaranteed salary and whether defendant
owed plaintiff compensation for vacation benefits. As to the
guaranteed salary, the parties do not raise any material issues of
disputed fact. Rather, the question turns on the legal issues of
whether the November 11 letter agreement in conjunction with
defendant's payment to plaintiff of the amount offered in the
letter agreement constituted an accord and satisfaction and/or
whether the letter agreement constituted a release which operated
to bar plaintiff's cause of action against defendant.
There is some dispute between the parties as to whether the
letter agreement should be analyzed as an accord and satisfaction
or as a release. We believe that the November 11 letter agreement
contained elements of both an accord and satisfaction and a
release. An accord and satisfaction is a contractual method of
discharging a debt or claim by some performance other than that
which was originally due. Holman v. Simborg, 152 Ill. App. 3d 453,
456 (1987). A release is a contract whereby a party abandons a
claim or relinquishes a right that could be asserted against
another. Johnson v. Maki & Associates, 289 Ill. App. 3d 1023,
1026-27 (1997).
The part of the letter agreement that was in the nature of an
accord and satisfaction involved the agreement by plaintiff to
accept $100,000 as a lump sum severance payment when he contends
that he was entitled to a $250,000 guaranteed salary for 1995 under
the employment contract. The part of the letter agreement that was
in the nature of a release involved plaintiff's agreement to
relinquish his right to bring any legal action against defendant or
its parent companies.
We first address whether the letter agreement and the
subsequent related payment was an accord and satisfaction. To
constitute an accord and satisfaction, there must be (1) an honest
dispute between the parties as to an amount owed between them; (2)
a tender of payment with the explicit understanding of both parties
that it is in full payment of all demands; and (3) an acceptance of
the payment by the creditor with the understanding that it is
accepted as full payment. A.F.P. Enterprises, Inc. v. Crescent
Pork, Inc., 243 Ill. App. 3d 905, 911 (1993).
Thus, where there is an honest dispute as to an amount owed
and due between parties and the debtor tenders a check with the
explicit understanding that it is full payment of all demands, the
creditor's acceptance and negotiation of the check is an accord and
satisfaction. In re Estate of Castro, 289 Ill. App. 3d 1071, 1077
(1997). However, the partial payment of a fixed and certain demand
that is due and not in dispute does not constitute a satisfaction
of the entire debt even where the creditor agrees to receive a
partial payment for the whole debt and gives a receipt for the
whole demand. A.F.P. Enterprises, 243 Ill. App. 3d at 911.
In this case, plaintiff contends that there was no accord and
satisfaction because there was no honest dispute between the
parties as to the amount owed. Plaintiff does not contend that he
did not understand that defendant offered the payment as full
payment of all demands. Rather, plaintiff contends that his
acceptance of the $100,000 payment offered by defendant in the
letter agreement did not constitute an accord and satisfaction
because defendant indisputably owed plaintiff a guaranteed salary
for 1995 of $250,000 under the terms of the employment contract.
In support of this position, plaintiff argues that defendant
terminated him without cause and was therefore required to pay him
the full $250,000 yearly guaranteed salary.
We agree with plaintiff that, under the terms of the
employment contract, if defendant had terminated him without cause,
defendant would have owed plaintiff $250,000 for the second year of
the employment contract. However, the record does not support
plaintiff's position that defendant terminated him without cause.
The primary reason for our conclusion that defendant did not
terminate plaintiff without cause is the November 11 letter
agreement. The letter agreement unambiguously states that
defendant had not yet made a final decision as to plaintiff's
employment with defendant when plaintiff accepted the severance
payment offered by defendant. The letter agreement's offer of the
severance payment to plaintiff was contingent on defendant being
unable to propose a suitable position to plaintiff.
However, plaintiff opted to accept the proposed severance
payment immediately after negotiating a substantially greater lump
sum payment amount than the amount defendant initially offered.
Under the terms of the letter agreement, plaintiff could have
waited to see if defendant offered him another position. If
defendant did not offer plaintiff another position within the time
frame of the employment contract, then plaintiff could have
demanded the guaranteed salary. Plaintiff instead chose to
immediately accept the severance option. Thus, under the terms of
the letter agreement, defendant did not terminate plaintiff;
rather, plaintiff accepted defendant's severance payment offer and
effectively agreed to be terminated immediately instead of waiting
to see if defendant offered him another position.
We recognize that plaintiff testified that Ould-Ferhat made it
clear, in oral statements, that defendant did not really intend to
offer plaintiff another position. However, the unambiguous terms
of the letter agreement to the effect that no final decision had
been made regarding plaintiff's employment with defendant are
controlling. See Quake Construction, Inc. v. American Airlines,
Inc., 141 Ill. 2d 281, 288 (1990) (if no ambiguity in written
agreement, court must determine parties' intent solely from
writing).
We note that, by immediately accepting the severance payment
offer, plaintiff positioned himself to be immediately available for
other employment, for which he would presumably receive
remuneration, while retaining the severance payment. Under the
terms of the letter agreement and the employment contract, if
plaintiff had not accepted the severance payment, he would have had
to be available for other employment with defendant in order to be
entitled to the guaranteed salary.
In addition to the terms of the letter agreement, there are
other grounds for concluding that defendant did not terminate
plaintiff without cause. In his October 27 letter to defendant,
plaintiff sought to resign from his position as trading manager.
The October 27 letter incorporated the terms of plaintiff's July 25
resignation letter. In the July 25 resignation letter, plaintiff
stated that he understood that his resignation as trading manager
would result in his loss of the guaranteed salary. Thus, under the
terms of his proposed resignation, plaintiff concedes that he would
not be entitled to the guaranteed salary if defendant accepted his
resignation.
Plaintiff attempts to counter the effects of his resignation
letter by asserting that defendant did not accept his attempted
resignation and that he continued in his position as trading
manager until defendant terminated him. However, the record shows
that defendant responded to plaintiff's October 27 resignation
letter by deciding to close its Chicago office. This could
certainly be construed as an acceptance of plaintiff's attempted
resignation in that, as a result of the resignation letter,
defendant decided to close the office and eliminate all the
positions in the office, including the position from which
plaintiff sought to resign.
Finally, even if defendant's response to plaintiff's October
27 letter is viewed as a termination of plaintiff, which is
contradicted by the terms of the November 11 letter agreement, it
could be regarded as a termination with sufficient cause. It is
undisputed that in response to plaintiff's letter defendant decided
to close its Chicago office. Defendant's decision to close the
office and terminate or move all of the employees in that office
was arguably sufficient cause for plaintiff's dismissal. See
Penzell v. Taylor, 219 Ill. App. 3d 680, 689 (1991) (employer's
closing of an office and termination of all employees in that
office constituted sufficient cause for dismissal of employee with
guaranteed salary).
Based on this record, we conclude that defendant did not
terminate plaintiff, or if it did terminate plaintiff, it arguably
did so with cause. In either case, defendant had a good-faith
basis to dispute that it owed plaintiff the guaranteed salary. In
view of this honest dispute regarding what, if anything, defendant
owed plaintiff, defendant's offer to plaintiff of the severance
payment, plaintiff's acceptance of the offer, and defendant's
subsequent payment to plaintiff of the offered amount with the
understanding that it was a full payment of any amount defendant
owed plaintiff constituted an accord and satisfaction with respect
to the guaranteed salary.
We next address the question of whether the November 11 letter
agreement also constituted a valid and effective release. The part
of the November 11 letter agreement that defendant asserts is a
release states that if plaintiff accepted the offered severance
payment he was required to renounce his right to engage in any
legal action against defendant or its parent companies provided
that his 1994 bonus was totally paid. Plaintiff signed the letter
agreement, accepted the offered severance payment, and cashed the
check that defendant tendered to plaintiff to cover plaintiff's
1994 bonus and the lump sum severance payment.
On appeal, a substantial part of the parties' arguments
concerns whether consideration is required for a release to be
valid. In a recent opinion, this court resolved that question by
clearly stating that a release, like any other contract, generally
requires consideration to be valid. Johnson, 289 Ill. App. 3d at
1026.
Plaintiff next contends that the severance payment offered by
defendant in the letter agreement was not sufficient consideration
to support a release because it was undisputed that defendant owed
plaintiff $250,000 as a guaranteed salary under the terms of the
employment contract. In support of this contention, plaintiff
relies on Upper Avenue National Bank v. First Arlington National
Bank, 81 Ill. App. 3d 208, 212 (1980), for the proposition that the
partial payment of an amount undisputedly due does not constitute
sufficient consideration for a release. However, that proposition
does not apply to this case because, as we have already determined,
there was a good faith basis for a dispute between the parties as
to the amount defendant owed plaintiff under the employment
contract. Accordingly, the severance offer was sufficient
consideration to support any release that was part of the
agreement.
Because the offered severance payment was sufficient
consideration to support a release, we conclude that plaintiff's
acceptance of the offer, as set out in the November 11 letter of
agreement, constituted a valid release. Under the terms of this
release, plaintiff relinquished his right to sue defendant.
Plaintiff next contends that even, if the November 11 letter
agreement contained a valid release, the release was not
enforceable because defendant did not meet a precondition to the
enforcement of the release that was required by the letter
agreement. The precondition in the letter agreement was the total
payment of plaintiff's 1994 bonus. Plaintiff asserts that the
precondition was not met because the calculation of his 1994 bonus
did not include an allowance for his vacation pay.
The record does not support plaintiff's claim that his
vacation pay should have been part of the calculation of his bonus.
Under the terms of the employment contract, plaintiff's bonus was
based only on the amount of plaintiff's own trading profits and
the amount of the trading profits of the traders plaintiff
supervised. Nothing in the employment contract even suggests that
plaintiff's vacation pay was intended to be a factor in calculating
plaintiff's bonus.
Plaintiff makes no other claims that the bonus amount included
in the check he received from defendant was incorrect. We
therefore conclude that defendant paid plaintiff his total 1994
bonus. Consequently, the precondition to the enforcement of the
release in the November 11 letter agreement was met and the release
was enforceable.
We have now determined that there was a valid accord and
satisfaction between the parties with respect to any guaranteed
salary defendant owed plaintiff. We have also determined that
there was a valid and enforceable release by which plaintiff
relinquished his right to sue defendant. Either the accord and
satisfaction alone or the release alone would have operated to bar
plaintiff's suit with respect to his guaranteed salary claim. It
follows that the accord and satisfaction in conjunction with the
release certainly would have operated to bar plaintiff's suit
against defendant with respect to his guaranteed salary claim. For
these reasons, we conclude that the trial court did not err when it
granted summary judgment in favor of defendant as to plaintiff's
claim that defendant owed him part of a guaranteed salary under the
employment contract.
Plaintiff next contends that, notwithstanding any accord and
satisfaction or release, defendant owes him compensation for
vacation pay which he contracted to receive but did not receive.
Plaintiff asserts that he is entitled to this vacation pay pursuant
to the Wage Payment Act.
Plaintiff relies on section 5 of the Wage Payment Act.
Section 5 requires an employer to make a final compensation payment
to any separated employee no later than the employee's next regular
pay day. 820 ILCS 115/5 (West 1996). Section 5 also generally
requires an employer to include in the final compensation payment
the monetary equivalent of all earned but unused vacation time that
the employee was entitled to at the time of his separation. 820
ILCS 115/5 (West 1996).
In this case, plaintiff's employment contract with defendant
provided that plaintiff was entitled to four weeks of paid
vacation. The employment contract did not specify what the time
frame was for plaintiff to use this paid vacation. Plaintiff
asserts that he was entitled to four weeks of paid vacation per
year. Defendant does not dispute that assertion. We will
therefore assume that plaintiff was entitled to four weeks of paid
vacation per year under the employment contract.
In an affidavit, Ould-Ferhat stated that during 1994 plaintiff
received in excess of the vacation benefits due to him. The
affidavit also referred to documents showing requests plaintiff
made to defendant for time off work. One of these documents, dated
May 16, 1994, is entitled "Vacation Request" and shows a request by
plaintiff for the use of 23 vacation days for the period from July
25, 1994, through August 24, 1994. The document is signed by
plaintiff and shows that plaintiff had zero vacation days remaining
to be taken.
Plaintiff does not attempt to rebut Ould-Ferhat's statement in
his affidavit regarding plaintiff's receipt of excess vacation
time. Rather, plaintiff asserts that his employment compensation
had no direct relationship to the amount of hours he worked. Based
on this assertion, plaintiff reasons that there was no way for
defendant to compensate him for vacation time other than to make a
separate payment to him for his vacation time based on a pro rata
share of his guaranteed annual minimum salary of $250,000
regardless of how much vacation time he actually took.
Our review of the record reveals no support for plaintiff's
assertions. Nothing in the employment contract even suggests that
the parties intended plaintiff's vacation pay to be some kind of
additional compensation that defendant would owe plaintiff even if
plaintiff took all or more of the vacation time that he was
entitled to take under the contract. Moreover, plaintiff's
argument is undermined by his requests for vacation time.
Plaintiff does not explain why he submitted requests to use
vacation time if defendant was obliged to pay plaintiff for his
vacation time no matter how much time plaintiff took off.
Nor does the language of the Wage Payment Act support
plaintiff's position. Section 5 of the Wage Payment Act provides
that it applies to vacation time when "an employee resigns or is
terminated without having taken all vacation time earned in
accordance with" his employment contract. 820 ILCS 115/5 (West
1996). The Wage Protection Act makes no provision for compensation
to a separated employee for vacation time when the employee has
taken all the vacation time to which he was entitled.
Plaintiff did not file a counteraffidavit or otherwise attempt
to rebut defendant's affidavit and exhibits which established that
plaintiff took all of the vacation time to which he was entitled
under the employment contract. Rather, plaintiff simply made
unsupported arguments that he was entitled to be paid for vacation
time regardless of how much vacation time he took.
Based on this record, we conclude that plaintiff has failed to
present a factual basis that would arguably show that defendant
owed plaintiff any compensation for vacation time when plaintiff
accepted defendant's offer of severance compensation. Therefore,
plaintiff's claim that defendant violated the Wage Payment Act by
not including vacation pay in his final compensation fails.
Accordingly, the trial court did not err when it granted summary
judgment in favor of defendant on this issue.
Based on the foregoing, the judgment of the circuit court of
Lake County is affirmed.
Affirmed.
INGLIS and BOWMAN, JJ., concur.