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Tesler v. Miller/Howard Investments, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

July 3, 2017

ERIC S. TESLER, Plaintiff,
MILLER/HOWARD INVESTMENTS, INC., a Delaware Corporation, Defendant.


          TANYA WALTON PRATT, JUDGE United States District Court

         This matter is before the Court on Defendant Miller/Howard Investment Inc.'s (“Miller/Howard”) Motion to Dismiss Plaintiff Eric Tesler's (“Tesler”) Second Amended Complaint. (Filing No. 42.) Tesler, a former employee of Miller/Howard raises multiple claims against Miller/Howard concerning unpaid compensation. (Filing No. 35.) Specifically, Tesler is asserting claims of violation of Indiana's Wage Claim Statute, Ind. Code § 22-2-9 et seq. (Count I); violation of Indiana's Wage Payment Act, Ind. Code § 22-2-5 et seq. (Count II); unjust enrichment (Count III); conversion, Ind. Code § 35-43-4-1 (Count IV); negligence (Count V); breach of fiduciary duty (Count VI), fraud (Count VII) and for breach of contract (Count VIII).

         For the reasons that follow, the Court grants in part and denies in part the Motion to Dismiss.

         I. BACKGROUND

         The following facts are not necessarily objectively true. But as required when reviewing a motion to dismiss, the Court accepts as true all factual allegations in the Second Amended Complaint and draws all reasonable inferences in favor of Tesler as the nonmoving party. See Bielanski v. County of Kane, 550 F.3d 632, 633 (7th Cir. 2008).

         Miller/Howard is a financial investment management corporation that sells securities. On October 27, 2010, Tesler accepted Miller/Howard's offer of employment as a Regional Sales Director, which involved selling management investment portfolios in his assigned geographic area, the “Middle United States.” (Filing No. 35 at 3.) Tesler's compensation package included, among other terms: (1) a commission of “25%-10-%-5%-3% ongoing” for each non-institutional account (“SMA”) originally opened by Tesler; (2) a commission of “15%-10%-5%” for each institutional account (“UMA”) serviced by Tesler; and (3) a 3% “ongoing” trail commission for current accounts “to service existing business in territory.” (Filing No. 1-1 at 3.) According to its written Employee Policies, Miller/Howard would pay employees for all earned, accrued, and unused vacation time upon separation of employment. (Filing No. 35 at 4.)

         Tesler opened numerous SMA accounts and managed numerous UMA accounts during the course of his employment, which yielded substantial and lucrative management fees for Miller/Howard. (Filing No. 35 at 4.) However, by April 2012, he became concerned that the commission amounts being paid to him were not accurate or consistent with the Terms of Compensation. (Filing No. 35 at 5.) Miller/Howard never explained how Tesler's commission payments were calculated, and Miller/Howard refused his repeated requests for an accounting which would allow him to verify the payments. (Filing No. 35 at 5.) Miller/Howard never provided Tesler with any type of accounting of the fees generated from these accounts, and thereby concealed their true values. (Filing No. 35 at 4-5.)

         On March 7, 2014, Tesler's employment was terminated. (Filing No. 35 at 3.) He alleges that Miller/Howard failed to pay him for his unused vacation time, outstanding reimbursable expenses, commissions that were due to him for UMA and SMA accounts, and his ongoing 3% commission. (Filing No. 35 at 6.)

         On or about April 14, 2014, Miller/Howard's auditor notified Tesler that due to an “accounting error, ” he was underpaid for commissions in the third quarter of 2013 in the amount of $2, 096.28. (Filing No. 35 at 6.) On or about July 18, 2014, Miller/Howard notified him of another “error” in his commission payments, resulting in an underpayment of $12, 389.00 for 2013 and the first quarter of 2014. (Filing No. 35 at 7.) And on July 29, 2014, Miller/Howard provided an amended accounting. (Filing No. 35 at 7.) Tesler alleges that this accounting shows that he was underpaid in the amount of $39, 365.25. (Filing No. 35 at 7.) Miller/Howard has refused to pay any of these amounts. (Filing No. 35 at 7-8.)

         Miller/Howard continues to refuse to provide Tesler with a complete and accurate accounting of all the management fees earned from SMA or UMA accounts for the fourth quarter of 2010, and for 2011 and 2012. (Filing No. 35 at 8.) Due to Miller/Howard's conduct, Tesler has lost past, present, and future income, vacation benefits, and reimbursement for expenses incurred during his employment; he has suffered damage to his career; and he has incurred additional financial losses, including the costs associated with claiming his unpaid wages. (Filing No. 35 at 8.)

         Tesler filed an initial Complaint in this Court on March 21, 2016[1] (Filing No. 1), and the operative Second Amended Complaint on October 19, 2016, (Filing No. 35), alleging eight causes of action: violation of Indiana Code Section 22-2-9, the Indiana Wage Claims Act (“IWCA”), violation of Indiana Code Section 22-2-5, the Indiana Wage Payment Act (“IWPA”), unjust enrichment, conversion, negligence, breach of fiduciary duty, fraud, and breach of contract. (Filing No. 35 at 9-14.) Miller/Howard filed a Motion to Dismiss, (Filing No. 41), raising challenges to each of Tesler's eight causes of action. The Court will address each argument in turn.[2]


         Federal Rule of Civil Procedure 12(b)(6) allows a defendant to move to dismiss a complaint that has failed to “state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When deciding a motion to dismiss under Rule 12(b)(6), the Court accepts as true all factual allegations in the complaint and draws all reasonable inferences in favor of the plaintiff. Bielanski v. County of Kane, 550 F.3d at 633 (7th Cir. 2008). However, courts “are not obliged to accept as true legal conclusions or unsupported conclusions of fact.” Hickey v. O'Bannon, 287 F.3d 656, 658 (7th Cir. 2002).

         The complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In Bell Atlantic Corp. v. Twombly, the Supreme Court explained that the complaint must allege facts that are “enough to raise a right to relief above the speculative level.” 550 U.S. 544, 555 (2007). Although “detailed factual allegations” are not required, mere “labels, ” “conclusions, ” or “formulaic recitation[s] of the elements of a cause of action” are insufficient. Id.; see also Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 603 (7th Cir. 2009) (“it is not enough to give a threadbare recitation of the elements of a claim without factual support”). The allegations must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. Stated differently, the complaint must include “enough facts to state a claim to relief that is plausible on its face.” Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. ...

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