United States District Court, E.D. Wisconsin
ROUMANN CONSULTING INC. and RONALD ROUSSE, Plaintiffs,
SYMBIONT CONSTRUCTION, INC., et al., Defendants.
DECISION AND ORDER
ADELMAN DISTRICT JUDGE.
plaintiffs, Roumann Consulting Inc. and Ronald Rousse,
previously filed a civil action in this court against an
entity called T.V. John & Son, Inc. (“TVJ”),
alleging breach of contract and related claims. See
E.D. Wis. No. 17-C-1407. That action is pending before me.
After I denied the plaintiffs' motion to file a second
amended complaint in the that case, the plaintiffs commenced
this action against Symbiont Construction, Inc. (which is
alleged to be the new name of T.V. John & Son, Inc.), two
of its corporate affiliates (which are alleged to be alter
egos of Symbiont Construction, Inc.), and four of the
company's owners and managers. For the most part, in this
action, the plaintiffs allege the same claims against the
Symbiont defendants as they allege against TVJ in the
first-filed action. Although the plaintiffs also allege
several new claims, nearly all of them arise out of the same
facts as the claims alleged in the first-filed action.
defendants have moved, under Federal Rule of Civil Procedure
12(b)(6), to dismiss this action on the ground of
“claim splitting.” This ground, which is related
to claim preclusion (also known as res judicata) but
is distinct from that doctrine, allows a federal court, in
the exercise of its discretion, to dismiss a suit that is
duplicative of another pending federal suit. In a nutshell,
the doctrine of claim splitting applies when the first suit
would preclude the second suit but for the fact that no final
judgment has been entered in the first suit. See Katz v.
Gerardi, 655 F.3d 1212, 1217-19 (10th Cir. 2011). The
defendants also contend that, to the extent certain claims in
the second suit are new, they should be dismissed on the
merits. I consider these matters below.
to the allegations of the complaint in this action, which I
accept as true for purposes of this motion, 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. Defendant
Symbiont Construction, Inc., is a construction general
contracting firm that was formerly known as T.V. John &
Son, Inc. Compl. ¶ 8. The plaintiffs allege that defendants
Symbiont Holding Company, Inc., and Symbiont Science,
Engineering, and Construction, Inc., although incorporated as
distinct legal entities from Symbiont Construction, are in
fact alter egos of Symbiont Construction and each other and
therefore should have their separate corporate identities
disregarded. See Id. ¶ 88. The plaintiffs also
allege that the four individual defendants-Thomas Bachman,
Sonya Simon, Edward Manning, and Timothy Nelson-are
“co-owners” and officers of the Symbiont
entities. Id. ¶¶ 10-13, 31.
facts that led the plaintiffs to file both this suit and No.
17-C-1407 are as follows. In late 2011, before TVJ became an
affiliate of Symbiont, TVJ hired Rousse as an employee and
entered into a formal employment agreement with him. 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. The employment
agreement provided that Rousse would receive a 30% commission
on the gross profit of all new business that he brought to
TVJ. The parties performed under this agreement for several
years, and Rousse helped TVJ secure substantial business with
customers such as Menards and Kroger.
March 2015, TVJ was purchased by defendant Symbiont Holding
Company, Inc. Under the terms of the purchase agreement,
TVJ's assets and liabilities were assumed by Symbiont
Holding, including TVJ's obligations and liabilities
under the employment agreement with Rousse. Compl. ¶ 30.
That same month, the parties decided to convert Rousse from
an employee to an independent contractor. Rousse formed
Roumann Consulting, and on March 25, 2015, TVJ and Roumann
entered into an independent contractor agreement.
the independent contractor agreement, Rousse 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. Like with the
employment agreement, the parties performed under the
independent contractor agreement for some time, and Rousse
continued to obtain substantial business for TVJ from
Menards, Kroger, and other light-construction customers.
plaintiffs allege that, by later in 2015, Symbiont's
co-owners and managers (i.e., Bachman, Simon, Manning, and
Nelson) started to believe that Rousse was overcompensated.
In the spring of 2017, they “unsuccessfully attempted
to persuade Mr. Rousse and Roumann Consulting to lower
Roumann Consulting's commission rates.” Compl.
¶ 49. Ms. Simon-Symbiont's general counsel-began to
“undermine or harass” Rousse and told him that he
was “unnecessary” and that Symbiont “could
function properly without him.” Id. ¶ 50.
Further, as the spring progressed, Symbiont and TVJ
communicated directly with Rousse's customers in an
effort to cut him out of the business. Id. ¶
51. On two occasions, TVJ's president (Nelson) and Rousse
had disputes over certain clients and projects, and Nelson
purported to terminate Rousse over these matters.
Id. ¶ 52. However, Rousse continued to work for
August 2017, Bachman, Manning, Nelson, and Simon had a
meeting in which they decided they wanted to terminate the
independent contractor agreement with Rousse/Roumann. Compl.
¶ 54. That agreement provided that either party could
terminate it “for any reason” on 30 days'
written notice. Agreement § 4.1, ECF No. 1-1. However,
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.
independent contractor agreement did not contain a noncompete
provision or other provisions that limited Rousse's
ability to work for or consult with another construction firm
following his termination, whether for willful misconduct or
otherwise. Nor did it prevent Rousse from soliciting the
customers, such as Menards and Kroger, that he had brought to
TVJ or from hiring TVJ's employees. However,
Symbiont's four officers and co-owners wanted to prevent
Rousse from taking his former customers to a competing
construction firm after he was terminated. They also wanted
to prevent Rousse from hiring away TVJ's employees.
August 21, 2017, TVJ sent a letter to Rousse notifying him
that TVJ was terminating the agreement, effective September
20, 2017. See Compl. Ex. 2, ECF No. 1-2. The letter
was printed on TVJ letterhead but was signed by both Timothy
Nelson, as the president of TVJ, and Edward Manning, Jr., as
the CEO of “Symbiont®”. Id. 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.
letter, TVJ told Rousse that, given his right to receive
commissions on projects accepted by TVJ during the two-year
period following his termination from Menards, Kroger, L.A.
Fitness, and The Fresh Market, the parties had a
“mutual interest” in having TVJ continue to book
profitable business with these customers. Id. TVJ
stated that, therefore, it expected Rousse not to disparage
TVJ or Symbiont, interfere with its contracts with these
customers, or solicit TVJ's employees. TVJ told Rousse
that if he disparaged TVJ, interfered with its customer
contracts, or solicited its employees, TVJ would cease making
commission payments and consider taking legal action.
same time that TVJ sent the termination letter to Rousse, it
sent notices of the termination to Kroger, Menards, and
Rousse's other clients. TVJ informed these clients that
its parting with Roumann was “amicable” and that
TVJ would continue working on the clients' projects.
Compl. ¶ 71.
Rousse received the termination notice, he initially
acquiesced in TVJ's request that he not interfere with
TVJ's relationship with Kroger, Menards, and the other
clients. Compl. ¶ 77. Moreover, on September 22, 2017,
TVJ made a post-termination payment to Rousse in the amount
of $56, 038.44. However, the plaintiffs allege that, after
September 22, 2017, Symbiont's managers asked Rousse to
accept a single lump-sum payment in lieu of ongoing
commission payments so that the parties would not have to
“continue the business ‘marriage' for the
next two years (or more)” as contemplated by the
independent contractor agreement. Id. ¶ 78.
Rousse declined this request. At that point, Symbiont's
managers decided that, during his time at TVJ, Rousse had
engaged in “willful misconduct” in certain
respects and that therefore they could terminate the
agreement without making additional commission payments.
Id. ¶ 79.
Rousse's view, TVJ failed to make a required
post-termination payment at the end of September or early
October of 2017. On October 13, 2017, he and Roumann
commenced the action for breach of contract against TVJ that
is pending as No. 17-C-1407. On January 17, 2018, the
plaintiffs filed an amended complaint in that action alleging
that TVJ breached the employment contract and breached the
independent contractor agreement by failing to make required
payments. (The amended complaint includes a count for breach
of the duty of good faith and fair dealing, but this count
simply repeats the allegations of the breach-of-contract
counts.) The amended complaint also alleges that, following
Rousse's termination, TVJ mishandled certain projects for
his former clients, including Kroger. See Compl. in
17-C-1407 ¶ 40.j. The amended complaint alleges that
because of TVJ's incompetence, it earned fewer profits on
these projects than it would have if Rousse had still been
involved. The amended complaint alleges that because Rousse
was entitled to 30% of all the profits that TVJ earned on the
projects for his former clients, TVJ's incompetence
caused an “erosion” of his commissions, making it
liable for the difference. See id.
TVJ answered the first amended complaint in No. 17-C-1407, it
also filed a counterclaim seeking a declaration that the
plaintiffs were entitled to no further payments under the
independent contractor agreement. The counterclaim alleged
two grounds for such a declaration. First, it alleged that
Rousse had engaged in willful misconduct and that therefore
the independent contractor agreement should be deemed to have
been terminated for willful misconduct, which would entitle
the plaintiffs to no post-termination payments. Second, the
counterclaim alleged that Rousse had materially breached the
independent contractor agreement by failing to return
TVJ's property and confidential information at the time
of his termination.
March 20, 2018, the plaintiffs filed a motion for leave to
file a second amended complaint in No. 17-C-1407. The
proposed second amended complaint named Symbiont Science,
Engineering, and Construction, Inc., as a party. However,
that complaint did not allege distinct claims against this
Symbiont entity. Instead, it alleged that Symbiont was
TVJ's alter ego and that therefore the two companies
should be treated as a single corporate entity. See
Prop. Second Am. Compl. in 17-C-1407 ¶ 23. Thus,
according to that complaint, Symbiont was liable to the
plaintiff to the same extent TVJ was. The proposed second
amended complaint also alleged a new cause of action against
both TVJ and Symbiont-intentional interference with
prospective business relations. This cause of action alleged
that TVJ and Symbiont engaged in wrongful conduct that
“relationships” with the clients that he
previously brought to TVJ, i.e., Kroger, Menards,
and the Fresh Market. Id. ¶ 84. The alleged
wrongful conduct consisted of advising these customers that
Rousse had been terminated and “disparag[ing]”
Rousse and Roumann Consulting in unspecified ways.
Id. ¶ 83.
order dated May 7, 2018, I denied the plaintiffs' motion
for leave to file the second amended complaint. See
ECF No. 30 in No. 17-C-1407. I noted that the motion was
filed after the deadline for joining parties and amending
pleadings, and that therefore the plaintiffs had to establish
good cause for modifying the scheduling order before they
could be granted leave to amend. I found that the plaintiffs
had not shown good cause, and therefore I denied the motion
for leave to amend.
October 2, 2018, the plaintiffs filed their complaint in the
present action, which is based largely on the same factual
matter as the complaint in 17-C-1407, namely, Rousse's
termination, TVJ's failure to pay amounts due under the
employment and independent contractor agreements, and
TVJ's alleged incompetence in handling projects for
Rousse's former clients following his termination.
first three causes of action alleged in the complaint in this
case are identical to the first three causes of action in No.
17-C-1407: Count I is for breach of the employment agreement,
Count II is for breach of the independent contractor
agreement, and Count III is for breach of the duty of good
faith and fair dealing. Moreover, the plaintiffs allege a
separate cause of action (Count VIII) for breach of the duty
of good faith and fair dealing that expands on the claim of
commission erosion alleged in the amended complaint in No.
17-C-1407. In addition, two causes of action alleged in this
case could be characterized as affirmative defenses to
TVJ's counterclaims in the No. 17-C-1407. In one such
cause of action (Count IX), the plaintiffs allege that the
defendants are estopped from asserting willful misconduct as
a basis for refusing to make payments under the independent
contractor agreement. In another (Count X), the plaintiffs
allege that the defendants have waived their right to assert
willful misconduct as a basis for refusing to make such
fifth cause of action in this case is the claim for
intentional interference with prospective business relations
that the plaintiffs had alleged in their proposed second
amended complaint in No. 17-C-1407. That is, the plaintiffs
allege that by informing Rousse's customers that he had
been terminated and by disparaging him in unspecified ways,
the defendants ...