Johnson v. WATERFRONT SERVICES CO.

909 N.E.2d 342, 391 Ill. App. 3d 985, 47 Employee Benefits Cas. (BNA) 1868, 330 Ill. Dec. 629, 2009 Ill. App. LEXIS 286
CourtAppellate Court of Illinois
DecidedMay 28, 2009
Docket5-07-0458
StatusPublished
Cited by7 cases

This text of 909 N.E.2d 342 (Johnson v. WATERFRONT SERVICES CO.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. WATERFRONT SERVICES CO., 909 N.E.2d 342, 391 Ill. App. 3d 985, 47 Employee Benefits Cas. (BNA) 1868, 330 Ill. Dec. 629, 2009 Ill. App. LEXIS 286 (Ill. Ct. App. 2009).

Opinion

JUSTICE GOLDENHERSH

delivered the opinion of the court:

Plaintiff, Albert Johnson, Jr., filed a complaint against defendants, Waterfront Services Company and Geoffrey C. Smith, in the circuit court of Alexander County. The court entered a summary judgment in favor of defendants. The appeal raises two issues: (1) whether plaintiff’s complaint was preempted by the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. §1001 et seq. (2006)) and (2) whether the trial court erred by entering a summary judgment on plaintiffs claim of fraudulent misrepresentation. We reverse and remand.

FACTS

On March 12, 2003, plaintiff filed suit against defendants in the circuit court of Alexander County. Plaintiff alleged that in September 1984 he was hired as a dispatcher for Consolidated Grain and Barge Marine (Consolidated). In 1988 he became a licensed tugboat operator. In 1990, the officers of Consolidated formed Olympic Marine, which in 1994 became known as Paragon Marine Services, Inc. (Olympic/ Paragon).

Plaintiff alleged that in 1990, Waterfront Services Company (Waterfront) established the Waterfront Services Company Employee Stock Option Plan (ESOP). In February 1993, Consolidated and Olympic/Paragon entered into a joint venture with Waterfront whereby the companies pooled their resources and jointly provided barge repair services. Plaintiff remained an employee of Olympic/Paragon. Plaintiff alleged that during all times of the joint venture, “Waterfront maintained separate employees, payrolls, employee benefits[,j and chains of command from Consolidated and Olympic/Paragon.”

Plaintiff alleged that on several occasions in 1997 and 1998, Smith, the president of the board of directors of Waterfront, asked him to become an employee of Waterfront. Plaintiff further alleged that he declined these entreaties because he would lose the seniority he had with Olympic/Paragon. Plaintiff alleged that he was also reluctant because he had a history of negative experiences with Smith, and Smith would become his supervisor with an ability to fire him.

Smith allegedly offered several enticements for him to join the Waterfront payroll, including promises of superior health insurance and a pay raise. Smith also allegedly promised as follows:

“(b) [Plaintiff] would receive shares of Waterfront stock through the ESOP as though he had been employed by Waterfront from the date on which the ESOP came into existence, which was June 1, 1990;
(c) [Plaintiff] would receive service credit, for purposes of vesting in the ESOP, that would be calculated from the date on which [plaintiff] became employed by [Consolidated] ***.”

In October 1998, plaintiff left Olympic/Paragon and became an employee of Waterfront under Smith’s direct control and supervision. Plaintiff alleged that he accepted the job, and left his old position, in reliance on Smith’s promises. Plaintiff alleged that upon joining the Waterfront payroll, he received the promised pay raise, as well as credit for his years of employment with Consolidated and Olympic/ Paragon, but that he was not provided a statement of his ESOP account until August 1999. The statement reflected 100% vesting, but the shares had not begun to accumulate until October 1998. In August 1999, plaintiff confronted Smith, who responded that Waterfront had “run out of’ treasury shares. When plaintiff continued to pursue the matter, he was threatened with termination. Plaintiff was terminated on January 15, 2002.

Plaintiffs complaint contained two counts. Plaintiff labeled count I “Fraud.” Plaintiff alleged that defendants engaged in knowing misrepresentations and omissions that he would receive shares in the ESOP as if he had been a participant since its inception on June 1, 1990. He also alleged that these misrepresentations and omissions were material to his decision to leave his job with Olympic/Paragon and that he was deceived by the misrepresentation. Plaintiff labeled count II “Promissory Estoppel,” alleging that Waterfront should have foreseen that he “would rely on its promise of retroactive share allocation.”

Defendants filed a motion for a summary judgment (735 ILCS 5/2 — 1005(b) (West 2004)). Plaintiff attached several exhibits to his response and submitted an affidavit that he had accepted an offer of employment based on Smith’s promise of a pay increase, superior health care, and shares of stock dating back to when the plan came into existence. Plaintiff attested that he would not have left his previous job had it not been for Smith’s promise of retroactive service status. He admitted that he had no experience or knowledge whatsoever regarding the plan other than what he had been told by Smith and read in the “Summary Plan Description.” Plaintiff attested that he sought advice from other Waterfront employees, including Jim Patterson and Harold McClendon. Plaintiff further attested that Harold McClendon, a longtime employee of Waterfront, did not question the validity of the offer or indicate that any plan amendments were necessary to complete the action.

Plaintiff attached portions of the transcript of the discovery deposition of Smith. Smith testified that he played no role in implementing the joint venture and had nothing to do with what the employees of Olympic/Paragon were told when they came over to Waterfront. Smith described the offer he made to plaintiff, a promise to match vacation pay and better health insurance. Smith described the other benefits he offered:

“Q. [Plaintiffs attorney:] Well[,] did you tell [plaintiff] anything about your ESOP?
A. I told him that he would be able to participate in the ESOP
Q. Tell him anything else about the ESOP?
A. I believe he asked some questions about the ESOP And I told him that he would be able to get vesting service credit just like the guys that had come over from [Consolidated] and [Olympic/ Paragon] in 1993. So that whenever he became eligible and actually received his first allocation that based on his prior service he’d be 100 percent vested.
Q. Anything else?
A. No, sir.
Q. What was [plaintiffs] reaction to that proposal?
A. He wanted — if I recall, he wanted to think about it. He wanted to talk to Goat or Jim Patterson about it, as having been his boss for a period of time. And I guess give it some thought himself.”

Plaintiff also submitted an affidavit from Edward Smith, who negotiated the joint venture between Consolidated and Waterfront in 1993. Smith attested that any employees of Consolidated or Olympic/ Paragon prior to March 1, 1993, would be credited for employment on the same basis as if that service had been with Waterfront.

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909 N.E.2d 342, 391 Ill. App. 3d 985, 47 Employee Benefits Cas. (BNA) 1868, 330 Ill. Dec. 629, 2009 Ill. App. LEXIS 286, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-waterfront-services-co-illappct-2009.