Vision Energy, LLC v. Smith

1

2024 IL App (3d) 230289-U

VISION ENERGY, LLC, Plaintiff and Counterdefendant- Appellee, v. JANE E. SMITH, Defendant, Counterplaintiff, and Third- Party Plaintiff-Appellant

J. Turner Hunt, Third-Party Defendant- Appellant; OEG/Vision/Friends, LLC, and Orion Energy Group, LLC, Third-Party Defendants.

No. 3-23-0289

Court of Appeals of Illinois, Third District

June 18, 2024

This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of the 21st Judicial Circuit, Kankakee County, Illinois, Circuit No. 21-MR-116 Honorable Lindsay A Parkhurst Judge, Presiding.

JUSTICE DAVENPORT delivered the judgment of the court. Justices Holdridge and Hettel concurred in the judgment.

ORDER

DAVENPORT JUSTICE

¶ 1 Held: We affirm the circuit court's grant of summary judgment in favor of defendants on plaintiff's claim under the Illinois Wage Payment Collection Act.

¶ 2 In 2021, plaintiff Vision Energy, LLC (Vision) sued its former employee, defendant Jane E. Smith, seeking a declaration that the Illinois Wage Payment Collection Act (Act) (820 ILCS 115/1 et seq. (West 2020)) did not apply to a dispute over certain monies Smith was entitled to receive under a July 2012 memorandum of understanding (MOU). In response, Smith brought counterclaims against Vision and third-party claims against J. Turner Hunt, OEG/Vision/Friends, LLC (OVF), and Orion Energy Group, LLC (Orion).^[1] Smith in part asserted that Vision and Hunt violated the Act when Vision failed to pay her certain monies per the MOU (wage claim). The circuit court later entered summary judgment on Smith's wage claim in Vision and Hunt's favor.

¶ 3 Smith appeals, and we affirm.

¶ 4 I. BACKGROUND

¶ 5 A. The K4 Wind Farm

¶ 6 Hunt is the sole owner of Vision, which has its principal place of business in Ohio. In 2007, Vision began developing the K4 Wind Farm in Ford, Iroquois, Kankakee, and Livingston Counties, by obtaining leases and easements from private landowners to site wind turbines. Vision enlisted Brent Creek, Marci Burton, and Jeff Harris to assist with the development. In August 2008, Hunt formed Friends of K4, LLC (Friends), which had a 10% ownership interest in the K4 wind farm. Friends had four members: Vision, Creek, Burton, and Harris. (Vision was the managing member but had no equity.) Over time, Vision compiled the leases and easements necessary for the construction of a 50,000-acre wind farm.

¶ 7 B. Vision Hires Smith to Manage Its Office

¶ 8 Vision leased an office in Herscher to act as its base of operations for this project. In July 2008, Vision hired Smith to manage the office on a part-time basis at the rate of $17 per hour. Smith's duties included keeping records and interacting with landowners and others who came into the office. According to Smith, Harris was Vision's "main representative who worked out of the office." In late 2010, however, Harris left Vision, and many additional duties fell on Smith.

¶ 9 C. The July 2012 MOU

¶ 10 In 2012, Smith asked Vision to increase her pay. In her deposition, Smith explained that for her to remain an employee, she "felt [she] needed to receive compensation as in the form of royalty payments after the wind farm was built." Smith told Hunt she "was his anchor in Illinois" and would commit to the project until completion if she "would receive royalty payments after the wind farm was built for the duration of the wind farm." After some negotiations, in July 2012, Smith and Vision executed the MOU, which was the product of exchanged drafts.

¶ 11 The MOU contained several recital paragraphs, which indicated the following. Creek, Burton, and Harris had agreed to take reduced compensation in exchange for their interests in Friends. Smith was the sole on-site employee of Vision in Illinois. She worked a regular weekly schedule, was paid an hourly wage, and was "a valued development specialist working on the [wind farm] since July 1, 2008." However, Smith was not offered admission into Friends at the time of its organization because she was "not known" at that time. In addition, Friends was unable to admit Smith to Friends because that would have "require[d] undue legal complications on Friends and Friends['s] relationship with the other entities that are also owners of [the wind farm]." Nevertheless, Smith "ha[d] committed to [the] project until the [wind farm] was constructed." Thus, even though Smith did not agree to a reduced wage, Vision wished to provide "compensation" to Smith that was "similar to what Creek or Burton may receive as a result of [their] membership interest in Friends." All parties involved in the wind farm understood that Smith was to be considered part of a "Special Project Vehicle." Further, "all parties involved in the [wind farm] understood] as each portion of the project [was] built[,] *** Smith [was] included in the Special Project Vehicle."

¶ 12 Ultimately, Vision and Smith agreed to "a fixed wage of $1.00 per hour increase per year starting [on] July 1, 2012." In addition, Vision granted Smith royalties.^[2] Specifically, the MOU stated Smith was granted, "immediately and irrevocably, *** compensation equal to 2% of any and all portions of the [wind farm] up to 150 [megawatts] and 3% of any and all portions of the [wind farm] over 150 [megawatts]," which was to be "of [the] same like kind and at the same time as received by [the] member[s] of Friends." The MOU further provided that Smith could bequeath her royalty rights to her spouse or her son. In addition, Vision agreed that any negotiations to sell the wind farm would "include honoring [the MOU]."

¶ 13 After July 2012, Smith continued in her role as office manager. By 2014, her duties included maintaining records, meeting with landowners and their associates, and facilitating amendments to and extensions of their lease agreements. In addition, she coordinated the signing of "estoppels and [subordination, nondisturbance, and attornment agreements] and many documents" and acted as the project's notary. At that time, Vision paid Smith $26 per hour.

¶ 14 D. The K4 Wind Farm is Sold

¶ 15 In 2014, Electricite de France (EDF), a French government-owned electric utility company, purchased the right to construct the K4 Wind Farm. In exchange, EDF agreed to pay lump sums upon certain development milestones and ongoing royalties derived from the sale of electricity generated by the wind farm. EDF constructed the wind farm in two phases: Pilot Hill, which became operational in 2015 and can generate 175 megawatts, and Kelly Creek, which became operational in 2016 and can generate 184 megawatts.

¶ 16 E. EDF Hires Smith

¶ 17 After EDF purchased the wind farm, in August 2014, Smith's employment with Vision ended. Smith admitted this fact in her original answers to interrogatories and in a deposition she gave in a case brought by Harris against Vision. She now disputes that her employment with Vision ended. According to Smith, Vision did not owe her any wages or royalty payments when she left Vision.

¶ 18 Smith applied for a position with EDF, using Hunt as a reference. She spoke to John Baker, an EDF project developer, about the job and interviewed with Ian Krygowski. EDF hired Smith as a landowner liaison, initially on a temporary basis via Ranstad (a staffing agency) and later as a W-2 employee. Smith signed employment-related documents required by EDF and was given an EDF email address. EDF paid Smith $26 per hour, and Smith received employment benefits from EDF. Kryogwski was Smith's supervisor. Her duties included maintaining files, greeting landowners and their associates, planning events, and maintaining records of payments to landowners. EDF issued Smith's paychecks, withheld taxes, and provided her a W-2 statement each year she was employed.

¶ 19 In a deposition, Smith agreed she took no instruction from Vision or Hunt after she became EDF's employee. However, she testified "[t]he work [she] did for EDF also benefited all of the companies involved in the wind farm development." Smith continued her employment with EDF until she retired on February 2, 2017.

¶ 20 F. Smith Begins Receiving Royalties

¶ 21 In September 2014, Smith received her first royalty payment under the MOU, which was derived from a development milestone payment made by EDF. Two more milestone royalties followed in June 2015 and April 2016. Smith received her first royalty derived from energyproduction in April 2016. She received energy-production royalties again in July 2016, December 2016, March 2017 (two payments), and May 2017. At no time did Hunt tell Smith how her royalty payments were calculated.

¶ 22 G. Smith Stops Receiving Royalties

¶ 23 In 2017, however, Smith began to question Hunt about the payments she received, believing she was being shorted. In January 2017, Hunt offered Smith membership in Friends in exchange for giving up her rights under the MOU. He sent a proposed amended Friends operating agreement, which would admit her as a 20% member. Hunt and Smith discussed how to equalize her MOU rights with her proposed percentage share of Friends. Ultimately, in a May 2017 e-mail, Hunt told Smith that if she did not agree to exchange her MOU rights for a share of Friends, he would "take further actions that w[ould] not be favorable to [her]." Smith, however, refused to do so. From that point forward, Smith received no further royalties.

¶ 24 H. Procedural History

¶ 25 1. Vision's Declaratory Judgment Action

¶ 26 In March 2021, Vision filed a declaratory judgment complaint against Smith. Essentially, Vision alleged that Smith's employment ended on August 31, 2014, and that it had paid her all wages and final compensation...