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Roumann Consulting Inc. v. T.V. John & Son, Inc.

United States District Court, E.D. Wisconsin

August 1, 2019

ROUMANN CONSULTING INC. and RONALD ROUSSE, Plaintiffs,
v.
T.V. JOHN & SON, INC., Defendant.

          DECISION AND ORDER

          LYNN ADELMAN, DISTRICT JUDGE

         In this suit for breach of contract, plaintiffs Roumann Consulting Inc. and Ronald Rousse claim that defendant T.V. John & Son, Inc. (“TVJ”), failed to pay commissions and other amounts due under an employment contract and an independent contractor agreement. TVJ counterclaims, seeking a declaration that it owes no further payments to the plaintiffs. Before me now are the parties' cross-motions for summary judgment on TVJ's counterclaims.

         I. BACKGROUND

         Roumann Consulting is a Canadian company that provides bidding and management services for construction projects. Ronald Rousse, a citizen of Canada, is Roumann's sole owner. TVJ is a construction general contracting firm that is organized under the laws of Wisconsin and headquartered in Wisconsin.

         In late 2011, TVJ hired Rousse as an employee. At that time, Rousse had relationships with various “light commercial” construction customers, including The Kroger Company and Menard, Inc. By hiring Rousse, TVJ gained access to these customers and was able to expand its business in the light-commercial construction market. Later, the parties decided to convert Rousse from an employee of TVJ to an independent contractor. Rousse formed Roumann Consulting, and on March 25, 2015, TVJ and Roumann entered into an independent contractor agreement.

         Under the agreement, Rousse[1] was to pursue work for specific clients- Menards, Kroger, The Fresh Market, and L.A. Fitness-and assist with the management of construction projects for these clients. In exchange, TVJ agreed to pay Rousse an hourly rate and a commission of 30% of the net profits realized on each project.

         The parties performed under the independent contractor agreement for some time. However, in August 2017, TVJ decided to terminate the agreement. The agreement provided that either party could terminate it “for any reason” on 30 days' written notice. Agreement § 4.1, ECF No. 17-1. The agreement drew a distinction between termination for “Willful Misconduct” and termination “for any reason other than ‘Willful Misconduct.'” Id. § 4.2(b)-(d). Under the relevant provisions, if TVJ terminated the agreement for any reason other than willful misconduct, it was required to continue making commission payments to Rousse on projects related to his clients (i.e., Kroger, Menards, etc.) that TVJ accepted either while the agreement was in force or during the two-year period following the agreement's termination. Id. § 4.2(b). If, however, TVJ terminated the agreement for willful misconduct, then Rousse was not entitled to post-termination commission payments. The agreement defined willful misconduct as “any act committed with an intentional, willful or wanton disregard of the Company's interests as is found in deliberate proven violations or disregard of standards of behavior which [the] Company has a right to expect of [its] contractors, vendors or employees, or in carelessness or negligence of such a gross degree or recurrence as to manifest culpability, wrongful intent, or evil design of equal severity to such disregard.” Id. § 4.2(d).

         On August 21, 2017, TVJ sent a letter to Rousse notifying him that TVJ was terminating the agreement, effective September 20, 2017. See Countercl. Ex. B, ECF no. 17-2. The letter did not state that TVJ was terminating the agreement for willful misconduct. Moreover, the letter stated that TVJ intended to make commission payments to Rousse for projects accepted during the two-year period following the agreement's termination. The letter stated that this two-year period would end on September 20, 2019.

         In the letter, TVJ told Rousse that, given his right to receive commissions on projects accepted by TVJ during the two-year period following his termination, the parties had a “mutual interest” in having TVJ continue to book profitable business with Rousse's clients. Id. TVJ stated that, therefore, it expected Rousse not to disparage TVJ (or its affiliate, Symbiont) or interfere with its contracts with Rousse's clients. TVJ warned Rousse that if he disparaged TVJ or interfered with its customer contracts, TVJ would cease making commission payments and consider taking legal action.

         The termination provisions of the independent contractor agreement stated that, upon termination, Rousse was required to “immediately deliver to the Company any and all property, documents, records, and materials previously belonging to the Company or sourced from within the Company, including, without limitation, all Confidential Company Information.” Agreement § 4.2(e). In its August 21 letter to Rousse, TVJ requested that he “return any property, files (including project files), or Confidential Information belonging to TVJ as soon as possible.” ECF No. 17-2 at 2.

         On August 22, 2017, Rousse responded to TVJ's letter through his solicitor. See ECF No. 73-3. In his response, Rousse acknowledged his termination and stated that he expected TVJ to pay commissions on projects accepted during the two-year period following the termination. Rousse then raised other matters relating to the termination that are not relevant to the present motions.

         On August 31, 2017, TVJ responded to Rousse's letter. See Countercl. Ex. C., ECF No. 17-3. In this letter, which was addressed to Rousse's solicitor, TVJ reiterated its intent to pay commissions on projects accepted during the two-year period, stating “TVJ will provide Roumann with a commission report and pay the commission by the 30th of each month.” Id. at 1. The letter ended with the following paragraph:

Please be advised that TVJ and its affiliated entities wish to minimize contact with Roumann as Mr. Rousse has a history of communicating belligerently with Symbiont, TVJ, its subcontractors, and even its clients. His behavior and communications have risen to the level of “willful misconduct, ” which is evidenced in numerous emails from Mr. Rousse to each of the noted parties. As such, it is our preference to correspond directly with you, as his Solicitor, when possible. In the meantime, . . . TVJ intends to adhere to the terms of the Agreement.

Id. at 2. Although this letter mentioned TVJ's belief that Rousse had engaged in willful misconduct, it did not state that TVJ was terminating the agreement for willful misconduct. To the contrary, the letter reiterated TVJ's intent to continue paying commissions, which TVJ would have had no obligation to do in the event of a termination for willful misconduct.

         On September 22, 2017, TVJ paid Rousse $56, 038.44 for services rendered prior to the agreement's termination. According to Rousse, a short time later, TVJ offered to make a lump-sum payment to Rousse in lieu of the periodic commissions required by the agreement. Rousse declined the offer. In Rousse's view, TVJ then failed to make a required commission payment at the end of September or early October. On October 13, 2017, he and Roumann filed this lawsuit and alleged that TVJ breached the agreement by failing to pay amounts due.

         Rousse filed an amended complaint on January 17, 2018, which TVJ answered on February 6, 2018. The next day, TVJ filed a counterclaim against Roumann seeking a declaration that TVJ has no obligation to make further payments under the independent contractor agreement. The counterclaim alleges two grounds for such a declaration. First, TVJ alleges that Rousse engaged in willful misconduct prior to his termination and that therefore TVJ had grounds to terminate the agreement under § 4.2(c). TVJ cites two instances in which Rousse allegedly acted unprofessionally and contends that each meets the agreement's definition of willful misconduct. The first involved a series of insulting statements that Rousse made about Menards and one of its representatives at a construction site. After Rousse made the statements, the Menards representative told TVJ that if he received further communications from Rousse, he would consider TVJ to have breached the construction contract. Menards also issued a “trespass notice” to Rousse that prohibited him from entering any Menards property. These events occurred in June and July of 2016, see ECF Nos. 62-1 & 62-2, more than a year before TVJ terminated the independent contractor agreement. Rousse states that, at the time these events occurred and TVJ first learned about them, no one at TVJ reprimanded him or told him that he had engaged in unprofessional conduct. Rousse Aff. ¶ 30, ECF No. 57.

         The second instance of alleged unprofessional behavior occurred in January 2017, when Rousse asked TVJ to sign a letter to the Department of Homeland Security that was intended to expedite his travel to the United States from Canada. The letter had been prepared by Rousse's immigration attorney, and it stated incorrectly that Rousse/Roumann did not have a written contract with TVJ. Rousse forwarded the letter to someone at TVJ and asked that it be signed. Eventually, the letter made its way to TVJ's (technically Symbiont's) in-house counsel, who objected to the statement that Rousse and TVJ did not have a written contract. TVJ did not sign the letter, and it was never sent to the Department of Homeland Security. However, TVJ now contends that, by asking it to sign the letter, Rousse either knowingly asked TVJ to lie to the federal government or was “grossly careless” in failing to notice that the letter stated incorrectly that he and TVJ did not have a written contract. See ECF No. 60 at 22-23.

         TVJ's second basis for seeking declaratory relief involves Rousse's failure to return certain documents to TVJ at the time of his termination, as required by § 4.2(e) of the independent contractor agreement. During discovery in this case, TVJ sent requests for the production of documents to Rousse, asking for any materials in his possession relating to TVJ's customers. In response, Rousse produced emails relating to his work on TVJ projects. Some of those emails had attachments consisting of electronic versions of certain documents. TVJ now contends that three sets of these electronic documents are its property that Rousse should have returned at the time of his termination. The first consists of documents that TVJ emailed to one of Rousse's customers in order to serve as the contractor for a construction project in February 2017. The documents include TVJ's marketing materials, TVJ's proof of insurance, a list of TVJ's references, and Symbiont's consolidated financial report dated December 31, 2015. The second set of documents consists of an email from The Kroger Co. to Rousse attaching an architectural drawing relating to one of its construction projects. The third set of documents consists of spreadsheets containing contact information for potential subcontractors that TVJ provided to Rousse in 2015 and 2017.

         TVJ does not allege that Rousse's failure to return these documents at the time of his termination caused it any specific harm. However, it contends that Rousse's failure to return the documents at that time amounted to a material breach of the independent contractor agreement, which under Wisconsin law would excuse TVJ from continuing to perform under the agreement. TVJ contends that because Rousse committed ...


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