Carrara v. Midland Paper Company , 2023 IL App (1st) 221416-U ( 2023 )

2023 IL App (1st) 221416-UNo. 1-22-1416
Order filed August 8, 2023
FIFTH DIVISION
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
IN THE
APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
CHESTER CARRARA, ) Appeal from the
) Circuit Court of
Plaintiff-Appellee, ) Cook County
)
v. ) No. 2020-L-006215
)
MIDLAND PAPER COMPANY, ) Honorable
) Michael F. Otto,
Defendant-Appellant. ) Judge presiding.
JUSTICE MITCHELL delivered the judgment of the court.
Presiding Justice Delort and Justice Lyle concurred in the judgment.
ORDER
¶1 Held: We affirm the circuit court’s grant of summary judgment in favor of plaintiff on his
breach of contract claim because the plain language of the employment agreement’s
commission clause provides that defendant is to compensate plaintiff for his performance
as a sales representative.
¶2 Defendant Midland Paper Company appeals a grant of summary judgment in favor of
plaintiff Chester Carrara determining that Midland breached the employment agreement and owes
Carrara his sought commission. The issue presented is whether the circuit court erred in entering
judgment as a matter of law by dismissing Midland’s affirmative defense that Carrara materially
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breached the parties’ employment agreement because he held secondary occupations, potentially
breaching the performance clause of the agreement. For the following reasons, we affirm.
¶3 BACKGROUND
¶4 Carrara began employment at Midland in January 2003 as a general manager. His
employment agreement was amended twice afterwards. The first amendment reduced Carrara’s
compensation per a deferral of pay, and the second amendment promoted Carrara from a general
manager to a sales representative and altered the terms of his compensation. More specifically, the
second amendment removed the entirety of previous compensation language in the employment
agreement and replaced it with a commission clause. The commission clause stated that the
employee was to receive 3-1/3% of Midland’s annual pre-tax income from the branch where
Carrara worked. In May 2015, Carrara resigned.
¶5 In September 2019, Carrara brought suit against Midland for not paying him certain profit-
sharing payments between 2008 and 2015. Carrara raised two alternative claims: (1) Midland
breached the employment agreement and (2) Midland was unjustly enriched. In filing its answer,
Midland provided several affirmative defenses, one of which pled that Carrara materially breached
the performance of his role by holding secondary jobs. Specifically, Midland referenced the
performance clause of the employment agreement, which dictates that Carrara was to comply with
all company rules and policies, including the secondary employment provision. The provision
states that an employee may hold secondary jobs as long as the employee meets performance
standards and the outside employment does not present a conflict of interest with Midland. Since
Midland did not realize Carrara’s potential breach until after his employment terminated, Midland
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sought discovery to further investigate the facts, arguing that it should be released from fully
performing the employment agreement.
¶6 Carrara moved for summary judgment on his breach of contract claim. The circuit court
granted Carrara’s motion in his favor based on the contract’s cause provision, reasoning that
Midland’s affirmative defense fails as a matter of law. The circuit court entered judgment on the
breach of contract claim for Carrara and against Midland in the amount of $303,752.65 plus
interest. Midland timely appealed. Ill. S. Ct. R. 303 (eff. July 1, 2017).
¶7 ANALYSIS
¶8 Midland argues that the circuit court erred in granting Carrara’s motion for summary
judgment because Carrara’s employment was not terminated for “cause” and a genuine issue of
material fact exists on Midland’s affirmative defense. Carrara argues Midland’s affirmative
defense that Carrara materially breached the employment agreement first fails as a matter of law.
We review a grant of summary judgment de novo. Cohen v. Chicago Park District, 2017 IL
121800, ¶ 17.
¶9 Summary judgment is proper only when the pleadings, depositions, admissions, and
affidavits, when viewed in a light most favorable to the nonmovant, reveal that there is no genuine
issue of material fact and that the movant is entitled to judgment as a matter of law. 735 ILCS 5/2-
1005; Progressive Universal Insurance Co. v. Liberty Mutual Fire Insurance Co., 215 Ill. 2d 121,
127-28 (2005). The movant may meet its burden by affirmatively showing that some element of
the case must be resolved in its favor or by establishing that there is an absence of evidence to
support the nonmovant’s case. Neufairfield Homeowners Association v. Wagner, 2015 IL App (3d)
140775, ¶ 15. Summary judgment is a drastic means of disposing of litigation and should be
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granted only when the right to it is clear and free from doubt. Allstate Insurance Co. v. Tucker,
178 Ill. App. 3d 809, 812 (1989).
¶ 10 “The interpretation of a contract is a question of law and therefore may be decided on a
motion for summary judgment.” WLM Retail Trust v. Tramlaw Remainderman Ltd. Partnership,
2018 IL App (1st) 170819, ¶ 16 (citing Joyce v. Mastri, 371 Ill. App. 3d 64, 74 (2007)). When
evaluating a contract, our main objective is to determine the parties’ intentions at the time the
contract was created. Matthews v. Chicago Transit Authority, 2016 IL 117638, ¶ 77 (citing In re
Doyle, 144 Ill. 2d 451, 468 (1991)). A contract is construed as a whole “[b]ecause words derive
their meaning from the context in which they are used.” Gallagher v. Lenart, 226 Ill. 2d 208, 233
(2007).
¶ 11 The employment agreement’s compensation provision explains that Midland is to pay
Carrara a 3-1/3% commission for his services:
“Compensation: Company shall pay to Employee as follows:
(a) Commissions. Beginning on January 1, 2005, Employee’s compensation will be
converted to a commission based plan specifically designed for the Bloomington-
Normal Division ***.
(b) Profit-sharing. During the term of this Agreement, Employee will be eligible to
receive 3-1/3% of the annual pre-tax income of Company’s Bloomington/Normal
Division if, and only if, the Division has cumulative pre-tax income. *** In
accordance with the terms of Paragraph 3, above, this profit sharing provision
shall survive the termination of this Agreement, regardless of the reason(s) for
termination, as long as Company employs Employee.” (Emphasis added.)
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¶ 12 The termination clause lists four types of employment terminations: termination by
“mutual agreement,” by “expiration of agreement,” by “death or disability,” and for “cause.” The
“mutual agreement” termination provision provides that an “employee’s employment *** may
be terminated at any time by the mutual, written agreement of Employee and Company.” For a
termination by mutual agreement, an employee “shall not receive further compensation unless
the parties provide for such compensation in a written agreement.” In comparison, the “cause”
provision defines “cause” and provides that a termination of this type results in the payment of
any accrued obligations to the employee:
“ ‘Cause’ shall mean Employee’s: *** (v) breach of a fiduciary duty owed to Company;
(vi) breach of a material Company policy; or (vii) willful and substantial nonperformance
of assigned duties ***. Upon termination of this Agreement for ‘Cause,’ the only obligation
of Company to Employee, except for the continuation of medical coverage as required by
law, shall be the payment of any accrued, but unpaid, obligations.” (Emphases added.)
Additionally, the employment agreement provides that an amendment or modification is only
valid when Midland makes it in writing and Carrara signs it.
¶ 13 Carrara served as a sales representative at Midland in exchange for compensation, and
Midland was to pay Carrara a 3-1/3% commission when the division had cumulative pre-tax
income. The record establishes that Midland had cumulative pre-tax income between 2008 and
2015 and that Midland did not compensate Carrara for the complete 3-1/3% commission. The
employment agreement plainly states that the profit-sharing provision is to endure the
agreement’s termination. Additionally, the employment agreement does not contain any
language that allows Midland to avoid paying Carrara’s compensation, and Midland had neither
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amended nor modified the employment agreement to stipulate otherwise. As a result, regardless
of how Carrara terminated his employment, he is entitled to the 3-1/3% commission given the
plain language of the contract.
¶ 14 Lastly, Midland argues the circuit court erred in granting Carrara’s motion for summary
judgment because Carrara’s potential material breach terminated Midland’s obligations under the
employment agreement. The performance clause specifies that Carrara must adhere to all
company rules and policies, which are listed in the employee handbook and include the
secondary occupations provision. Midland asserts that “any contract is terminable upon the
occurrence of a material breach.” (Emphasis in original.) Rico Industries, Inc. v. TLC Group,
Inc., 2014 IL App (1st) 131522, ¶ 24 (citing Jespersen v. Minnesota Mining & Manufacturing
Co., 183 Ill. 2d 290, 294 (1998)). However, the plain language of the “cause” provision provides
that “cause” includes a breach of a material company policy, such as a violation of the secondary
occupations provision. The “cause” provision also provides a remedy—the payment of any
accrued, but unpaid obligations. As a result, while Carrara ultimately terminated his employment
by resigning, even in a situation where Midland terminated him for “cause,” Midland agreed to
pay him any accrued, but unpaid obligations. Midland’s defense therefore fails as a matter of
law. 1
¶ 15 CONCLUSION
¶ 16 The judgment of the circuit court of Cook County is affirmed.
1
Midland argues that since the non-exhaustive clause lists four different terminations with four
different remedies, different situations result in different remedial options. However, Midland’s defense is
that Carrara potentially material breached. A material breach falls under the “cause” provision, which
provides an appropriate remedy in the contract’s plain language.
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¶ 17 Affirmed.
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