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Tesler v. Miller/Howard Investments, Inc.

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

February 4, 2019

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



         This matter is before the Court on Defendant Miller/Howard Investment Inc.'s (“Miller/Howard”) Motion for Summary Judgment. (Filing No. 84.) Plaintiff Eric S. Tesler (“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 unjust enrichment (Count III), negligence (Count V), breach of fiduciary duty (Count VI), and breach of contract (Count VIII). For the following reasons, the Court grants in part and denies in part the Motion for Summary Judgment.

         I. BACKGROUND

         The following facts are not necessarily objectively true, but as required by Federal Rule of Civil Procedure 56, the facts are presented in the light most favorable to Tesler as the non-moving party. See Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

         Miller/Howard is a financial management corporation that sells securities. It hired Tesler in October 2010 as a Regional Sales Director to perform sales duties from his home in Fishers, Indiana. Tesler's job was to market Miller/Howard's financial services to investment advisors in his assigned region, the “Middle United States, ” and hopefully induce them to patronize Miller/Howard instead of another financial services company. Tesler did not provide investment management services; rather, he sold the investment management services that other Miller/Howard employees provided. He reported to Steve Chun (“Chun”), Miller/Howard's Director of Marketing. (Filing No. 85-1 at 3.)

         Prior to hiring Tesler, Miller/Howard recruited him. During this recruitment process, Tesler spoke with Chun both over the telephone and at Miller/Howard's corporate headquarters in Woodstock, New York. He also spoke to Tracee Cannon-Gordon (“Cannon-Gordon”), a recruiter employed by a recruiting firm that Miller/Howard had hired to assist in filling the Regional Sales Director position. Id. The parties dispute whether Cannon-Gordon was an agent of Miller/Howard and whether she was empowered to negotiate employment terms with Tesler on Miller/Howard's behalf. (Filing No. 85 at 3; Filing No. 93 at 2-3.)

         Tesler discussed compensation with Chun in anticipation of being hired at Miller/Howard. (Filing No. 85-2 at 11.) Chun told Tesler that, for accounts he generated, he would receive a “25 percent commission the first year the account is opened, 10 percent in the second year, and 5 percent in the third year, and 3 percent perpetuity.” Id. When asked whether Chun used the word “perpetuity, ” Tesler testified “I believe his words were ‘ongoing,' but he also referenced, when I asked him what, you know, ‘ongoing' meant, if I recall correctly, he used the words ‘perpetuity,' which also appears in their documentation.” Id. Tesler also discussed compensation with Cannon-Gordon, who quoted the same commission structure as Chun, but specifically explained that Tesler would continue to receive the 3% commission on accounts he originated even after he left the firm's employ. Id. at 14.

         On October 27, 2010, Tesler accepted Miller/Howard's offer of employment as a Regional Sales Director. (Filing No. 85-1 at 2.) When he was hired, he signed three relevant documents. First, on October 27, 2010, both Tesler and Chun signed a document titled “Terms of employment and compensation.” Id. at 9. That document laid out the compensation structure Tesler would receive at Miller/Howard, which included a “$75, 000 base salary” and a “commission schedule for [separately managed] accounts-25%-10%-5%-3% ongoing, ” enacting the discussions Tesler had with Chun and Cannon-Gordon prior to his hiring. Id. Tesler would also receive a 15%-10%-5% commission schedule for institutional accounts (“UMA”) and a “3% ongoing trail for current accounts-to service existing business in territory.” Id.

         Both parties designated Miller/Howard's employee handbook, titled “Employee Policies”. (Filing No. 85-1 at 14-27; Filing No. 8-2.) The employee handbook specifies that “[t]erminated employees will be paid for vacation hours earned and not taken up to the point of termination. Sick hours earned and not taken will not be paid upon termination.” (Filing No. 85-1 at 19.) (Emphasis in original.) Tesler signed a document acknowledging he had read and understood the Employee Policies on November 5, 2010. Id. at 57. That acknowledgment form stated,

I understand that the contents of the policies are presented as a matter of information only and are not to be construed as a contract between the Company and any of its employees…. I further understand that my employment is not for a specified term and that it may be terminated with or without cause at the will of either the Company or myself.


         The third document Tesler signed upon his employment with Miller/Howard was called “CONFIDENTIALITY AGREEMENT.” Id. at 54-55. By that agreement, also signed on November 5, 2010, Tesler agreed to keep Miller/Howard's proprietary information confidential, including investment techniques and strategies and information pertaining to principals and investors. Id. The agreement prohibited Tesler from “tak[ing] possession outside of the office or on electronic media any documents, formulas, notes, files, client or contact lists, or work product of the employer, notwithstanding that he employee may have participated in the creation of such work product.” Id.

         On November 5, 2010, Tesler signed a document certifying that he had read and understood Miller/Howards' Code of Ethics. Id. at 49. Tesler certified in that document that he would comply with the “Code of Ethics” as well as “Miller/Howard Investments' Insider Trading Policy” and its “Personal Emails Policy.” Id. Neither party designated the Miller/Howard's Code of Ethics or the Insider Trading Policy or Personal Emails Policy, and thus those documents are not part of the record of this case.

         During Tesler's employment with Miller/Howard, he opened numerous separately-managed accounts (“SMA”) and managed numerous UMA accounts, yielding management fees for Miller/Howard. Miller/Howard paid commissions as a percentage of the management fee collected for an account. When a customer opened an account for management at Miller/Howard, the company would assess a management fee against the account on a quarterly basis. Regional Sales Directors earned a commission based on a percentage of that management fee. For example, if an SMA was opened, the Regional Sales Director would receive a quarterly commission in the amount of 25% of the management fee paid on that account each quarter (with the exception of the quarter in which the account was opened). This 25% commission would continue each quarter for the first year the account was opened and then decrease from there according to the commission schedule.

         Miller/Howard asserts it paid the quarterly commissions to Regional Sales Directors during the calendar quarter for which they were due. (Filing No. 85-1 at 4.) For example, Tesler was paid $27, 900.84 commission on February 7, 2014. Id. at 12. That commission was based on the management fees assessed against accounts in Tesler's assigned territory during January, February, and March of 2014. Tesler either did not understand this process or does not agree that commissions were paid during the calendar quarter for which they were due. He testified that “[t]he commission-the second quarter commission would be paid after they collect the management fee to-from my understanding, and so it would be after the-basically after the end of the quarter.” (Filing No. 85-2 at 20.)

         Whether it was because he did not understand the process or for some other reason, in April 2012, Tesler became concerned that the commission amounts he was being paid were not consistent with the Terms of Compensation agreement he signed. (Filing No. 85-3 at 4.) Tesler requested from Chun a detailed accounting of his “commission run” so that he could independently calculate the amount he was owed. Id. Neither Chun nor anyone else at Miller/Howard fulfilled that request. Id. Tessler contends that Miller/Howard disciplined, and ultimately terminated him because he raised questions about the proper calculation of his commission. Id. at 5.

         Miller/Howard terminated Tesler effective March 6, 2014. On that date, Chun telephoned Tesler to inform him his employment was terminated and instructed him to return all company property by the following day. Miller/Howard sent overnight shipping supplies to Tesler so that he could return company property the following day. Following his ...

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