Colagrossi v. UBS Securities, LLC
Opinion and Order: Defendant's motion to deem facts admitted 135 is denied. Defendant's motion for summary judgment 113 is granted. Judgment is entered in favor of defendant and against plaintiff dismissing plaintiff's cause of action with prejudice and awarding defendant the costs of suit. (For further detail see Opinion and Order) Signed by the Honorable William T. Hart on 6/4/2014:Mailed notice(clw, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
UBS SECURITIES, LLC,
No. 08 C 5471
OPINION AND ORDER
Plaintiff Gerard Colagrossi asserts claims based on an alleged oral
agreement and the Illinois Wage Payment and Collection Act. Defendant UBS
Securities LLC (“UBS”) moves for summary judgment, arguing that the oral
agreement is barred by two later written employment agreements, both of which
contained integration clauses barring reliance on any earlier oral or written
Plaintiff initiated this action by a suit filed in the Circuit Court of Cook
County, Illinois. UBS removed the case to this court based on diversity
jurisdiction. The court has jurisdiction of the subject matter and the parties.
28 U.S.C. § 1332.
In 2005, plaintiff Gerard Colagrossi was running the 24-hour futures
trading desk at Man Financial, Inc. Plaintiff’s team was responsible for
generating, clearing, and executing futures trades. Although the trading desk
primarily received orders for futures trades, it also sometimes received a different
type of order known as an exchange futures for physical trade (“EFP trade”).
Unlike the normal futures trades, the EFP trades were not directly executed by the
24-hour desk, but were instead sent to an EFP dealer for execution. Because the
EFP trade orders related to foreign exchange futures, the EFP dealer had to be
employed by a bank, and not a futures commission merchant.
Between the early 1990s and 2005, plaintiff hired, fired, and paid the
employees as he saw fit. Plaintiff developed the 24-hour desk’s client
relationships. On occasion he used his own money to do so.
In 2005, plaintiff was approached by John Murphy, the head of ABN’s
North American Futures division, about the possibility of moving to ABN. They
met several times to discuss compensation and other terms. All of the negotiations
occurred prior to July 29, 2005. Murphy orally offered plaintiff a base salary and
a 70/30 split on commissions from futures trades. Plaintiff claims -- and defendant
disputes -- that Murphy also promised that plaintiff would receive a 50% split of
profits from EFP trades referred by the 24-hour desk to ABN Bank. Plaintiff
claims he viewed this promise as an important factor in deciding to take the job
because the EFP profits were substantial.
Plaintiff told Murphy that, at Man, he hired and fired members of his
desk and that he decided how to divide commissions among team members.
Murphy testified that, although it was understood that plaintiff would have control
over hiring, firing, and allocations of the 24-hour desk bonus pool, plaintiff’s
decisions would be subject to Murphy’s approval.
Based on these discussions, plaintiff decided to move his desk to ABN,
and he and the other team members started working for ABN during August 2005.
On October 18, 2005, plaintiff signed a written employment agreement. Plaintiff
reviewed the agreement before signing it. He “believes [that he] did have a lawyer
check” the agreement before he signed it, although he said that the lawyer may
have checked the later employment agreement with UBS. Either way, he is certain
that “there was a lawyer involved somewhere.” The ABN agreement addresses
various employment issues and includes a provision for the payment of a base
salary and a 70/30 split on futures commissions. It also contains an integration
clause providing that any prior oral or written agreements or understandings are
Plaintiff received the base salary and 70% of futures profits as promised
at ABN. He did not receive any of the profits of EFP trades that his desk had been
generating. Plaintiff had conversations with Murphy complaining about the
nonpayment, but Murphy (according to plaintiff) just kept giving him excuses.
Murphy told him that he would do his best to make something happen, that he had
discussions with a couple of individuals about trying to get payment, and that
plaintiff should wait until everything was in place and that it would then all be
In May 2006, UBS acquired ABN’s futures division through a Stock and
Asset Purchase Agreement. Plaintiff talked with Murphy, who would later
become head of North American Futures at UBS, and Clark Hutchison, who was
the managing director at UBS, about continuing his 24-hour desk with UBS.
Plaintiff claims that he orally negotiated a deal with Hutchison and Murphy, which
included salaries as well as a retention bonus for his desk members. He also
claims that he told Hutchison that there was an agreement with ABN Bank that he
would be paid 50% of the EFP profits and that plaintiff wanted this agreement to
continue. Hutchison disputes this assertion. Plaintiff claims that Hutchison said
that UBS would honor for one year whatever agreements he had in place with
In September 2006, plaintiff entered into a written employment
agreement with UBS. The 10-page agreement provides, among other things, that
plaintiff was to receive a base salary and a discretionary bonus, but it does not
contain any provision about EFP profits. Like the ABN employment agreement,
the UBS agreement contains an integration clause barring reliance on earlier oral
agreements. Plaintiff negotiated several terms in the agreement. He was able to
obtain UBS agreement to shorten the non-compete clause from 6 months to 30
days and to increase his retention bonus by $25,000.
While at UBS, plaintiff was paid the compensation described in the
agreement, but once again, he was not paid any EFP profits. Plaintiff states that he
talked to Murphy and two others about the lack of payment. They told him they
would look into the issue, but nothing was ever resolved.
In his first year at UBS, plaintiff was allowed to allocate the bonus pool
money among the 24-hour desk employees. However, plaintiff’s allocations were
subject to approval of UBS supervisors. In August 2007, two desk employees
(Wulffleff and Tye) transferred to another UBS division. Murphy told plaintiff to
allocate some of the September pool money to them even though they did not
work at the 24-hour desk that month. Murphy believed they introduced business
to the desk, and he did not want plaintiff retaliating against them for moving to
another UBS division. The amount Murphy asked to be allocated to them was
consistent with what plaintiff had given them for the two prior months. Plaintiff
did not want to allocate any money to them and believed he had an unfettered right
to decide how such allocations should be made.
On September 27, 2007, UBS informed plaintiff that it was terminating
his employment effective October 11, 2007. Plaintiff was an at-will employee.
The record does not reflect why he was terminated. In this lawsuit, he does not
raise any challenge to his termination.
Plaintiff asserts a claim for breach of contract and a claim for violation
of the Illinois Wage Payment and Collection Act. Both claims are based on oral
promises originally made by John Murphy in August 2005 when he was
negotiating concerning moving the 24-hour desk from Man to ABN and then later
when he and Hutchison allegedly promised plaintiff that he could work at UBS
under the same agreements he had with ABN. Plaintiff seeks two forms of
compensation. First, he wants to be paid 50% of the EFP profits. This amount is
over a million dollars. Second, he seeks the September bonus pool money Murphy
made him pay to Wulffleff and Tye. This is approximately $70,000.
Although UBS disputes that Murphy or Hutchison made any oral
promises, it recognizes that for purposes of summary judgment this is a fact
question and it must accept plaintiff’s version of the facts. UBS bases its summary
judgment motion on the integration clauses in the two written employment
agreements: the October 2005 ABN agreement and the September 2006 UBS
First Employment Agreement
The ABN agreement is governed by Illinois law. The parties agree on
the basic contract principles to be applied. Under Illinois law, consistent with
general contract law, the court’s primary goal is “to give effect to the parties’
intent as expressed in the terms of their written agreement.” Lewitton v. ITA
Software, Inc., 585 F.3d 377, 379 (7th Cir. 2009). Illinois courts apply the “four
corners” rule. Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill.
1999). Under this rule, the court looks at the contract language to see if it is
facially ambiguous. Id. This determination is made without looking at any parol
evidence. Id. If the parties include in the contract an integration clause (i.e., a
clause stating that the written agreement is complete and final and reflects the
entire understanding of the parties), then they are “explicitly manifesting their
intention to protect themselves against misinterpretations which might arise from
extrinsic evidence.” Id. at 885. An integration clause “makes clear that the
negotiations leading to the written contract are not the agreement.” Id. (emphasis
in original). When there is an integration clause, “it is particularly unavailing for
[one party] to attempt to cloud the contract’s interpretation with post-hoc
explanations of its state of mind at the time the contract was inked.” Lewitton,
585 F.3d at 381.
The ABN employment agreement contains the following integration
This agreement contains the entire understanding of the
parties regarding the subject matter hereof and no terms,
including compensation terms, may be modified except by a
document signed by the parties, acknowledged by a human
resources representative, and referring explicitly hereto. You
acknowledge that you have not relied on any oral or written
representations or understandings not explicitly contained
herein in executing this agreement. This document
supercedes any and all oral or written understandings
regarding your employments with ABN AMRO or any of its
Def. Exh. L at 3.
This provision, by its plain terms, precludes any reliance on the oral
promises made by Murphy a few months before this agreement was signed. It
explicitly refers to “compensation terms.” In his response brief, plaintiff describes
both of the two promises at issue as relating to the issue of compensation. See Pl.
Resp. at 3 (“the compensation [plaintiff] now seeks (i.e. 50% of ABN Bank’s
profits generated from the EFP trades Plaintiff introduced to ABN Bank and
control over the allocation of his Desk’s bonus pool).”). More broadly, the
provision precludes reliance on any oral agreements relating to the “subject
matter” of the agreement. The subject matter, as set forth in the first sentence of
the agreement, is the “terms for [plaintiff’s] employment with ABN AMRO
Incorporated.” This point is confirmed by the various employment issues
addressed in the agreement, including terms about company policies, termination,
benefits, and vacation rights. The two promises in dispute clearly fall within the
general subject of plaintiff’s employment. Thus, even if Murphy and plaintiff
reached an oral agreement in August 2005, the agreement was superseded by the
October 2005 written agreement. See, e.g., Beard v. The Prudential Ins. Co. of
Am., 2002 WL 548727 *5 (N.D. Ill. Apr. 8, 2002) (granting summary judgment to
employer on sales manager’s claim for breach of an oral employment agreement
because, even if the oral agreement was made, it does not make the later written
Plaintiff raises two basic arguments to avoid the plain language of the
integration provision. He first argues that there are actually two separate and
distinct agreements, one with ABN Futures and one with ABN Bank. According to
this theory, when Murphy made the oral compensation promises in 2005, he was
acting as an agent for two different ABN entities. See Pl. Resp. at 5. On behalf of
ABN Futures, Murphy offered plaintiff a base salary and 70% commissions on
futures trades. This promise was later incorporated into the written employment
agreement. On behalf of ABN Bank, Murphy allegedly offered plaintiff 50% of
EFP profits. This promise was never reduced to a written agreement. Plaintiff
argues that the latter promise has “nothing to do with” the provisions in the ABN
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written employment agreement and, for this reason, the integration provision does
not override the oral agreement with ABN Bank. Pl. Resp. at 1.
This argument is insufficient to avoid summary judgment. As a factual
matter, there is no concrete evidence that Murphy was simultaneously wearing two
corporate hats, making certain promises for ABN Futures and then making others
just for ABN Bank. There was one set of negotiations, with one person
representing ABN, regarding one issue: whether plaintiff would work for ABN.
Plaintiff has not claimed that Murphy said anything to the effect that two separate
agreements would be required. Plaintiff in his response brief describes the
promise to pay EFP profits as being a “part” of one larger agreement. See Pl.
Resp. at 5 (“Plaintiff told Murphy that the would not move his desk from Man
Financial to ABN Futures unless EFP profit sharing was part of the agreement.”)
(emphasis added). This suggests he also anticipated one agreement.
Given that the EFP trades would be executed by ABN Bank, there is
nothing inherently illogical with the idea of having a separate agreement with
ABN Bank. The problem for plaintiff, however, is that he has offered no evidence
that Murphy or anyone else at ABN actually contemplated using this somewhat
unusual, bifurcated approach. The parties could have carved out an explicit
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exception to the integration provision. The EFP profits plaintiff is seeking are
over a million dollars. From plaintiff’s perspective, why would he be willing to
proceed with just an oral agreement, based on the statements of one person in the
corporation, especially if he regarded EFP profits as a substantial part of his
compensation and an important reason for taking the job? Plaintiff provides no
credible explanation, only stating vaguely that Murphy “never said their agreement
would be memorialized in a written agreement.” Pl. Resp. at 6. Plaintiff also
states that the written agreement was signed two months after he started working,
but he does not explain why this fact matters. He chose to sign the agreement at
that time rather than quitting or insisting that ABN put in writing the promise to
pay EFP profits.
Even if plaintiff had some evidence to support this theory, it would still
fail for the reason that the integration clause explicitly bars earlier oral agreements
with “ABN AMRO or any of its affiliates.” (Emphasis added.) Plaintiff has not
disputed that ABN Futures and ABN Bank are ABN affiliates. Accordingly, his
argument that the parties anticipated that there would be a separate oral agreement
with ABN Bank is foreclosed by the reference to affiliates.
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Plaintiff’s second argument discards the “two agreements” theory and
proceeds on the assumption that the one written contract in fact includes a promise
to pay EFP profits. (This argument does not apply to the promise about allocation
of bonus money.) Specifically, plaintiff points to the provision in the agreement
stating that he “will receive a payout of 70% of net income (excluding interest
income) after execution and operational charges ($.20 per contract), direct
expenses (not including draws) and management costs.” Def. Exh. L at 1.
According to UBS, this provision merely embodies the promise to pay the 70/30
split on commissions on regular futures trades. According to plaintiff, the phrase
“net income” is ambiguous because it is not limited on its face to futures trades
and thus arguably could also include EFP trades. Plaintiff wants to present parol
evidence to define what he believes is an ambiguous phrase.
Although plaintiff is correct that parol evidence may sometimes be used
to clarify an ambiguous provision, this rule does not help him here because even if
the phrase “net income” is ambiguous, no one could reasonably interpret it to
include a promise to pay 50% of EFP trades. This is because this provision states
that plaintiff would receive 70% of “net income.” Plaintiff has consistently taken
the position in this litigation that he was promised 50% of EFP trades. The
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obvious discrepancy between 70% and 50% makes it impossible to interpret the
“net income” provision in a way that would help plaintiff.
The integration clause bars any claims based on Murphy’s August 2005
Second Employment Agreement
Although the parties devote much of their briefs to analyzing the ABN
employment agreement, plaintiff has not actually sued any ABN entity in this
litigation. (He apparently filed a separate state court action against ABN, which is
discussed briefly below.) The only defendant in this case is UBS. His theory is
that the oral promises allegedly made by ABN were effectively ratified and carried
over to UBS when it told plaintiff it would honor the same agreements he had with
ABN. The pattern here is the same as before. Oral promises were allegedly made
and then a later written agreement was entered into which includes some (but not
all) of the oral promises.
The UBS agreement is governed by New York rather than Illinois law,
although neither side argues New York law supplies any different rules. See, e.g.,
W.W.W. Assocs. v. Giancontieri, 77 N.Y.S.2d 157, 162 (N.Y. 1990) (“Evidence
outside the four corners of the document as to what was really intended but
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unstated or misstated is generally inadmissible to add to or vary the writing.”).
The UBS integration clause states:
This agreement contains the entire understanding and
agreement between the parties concerning the subject matter
hereof (including any compensation arrangements), and
supersedes all prior agreements, understandings, discussions,
negotiations, and undertakings, whether written or oral,
between the parties with respect thereof.
Def. Exh. P at 8-9.
The same analysis and conclusions regarding the ABN agreement are
applicable to the UBS agreement. Like the ABN integration provision, the UBS
provision bars earlier agreements relating to both the specific issue of
“compensation arrangements,” but also to any issue affecting the overall
employment relationship. The wording is again clear and broad. The written
agreement sets forth the “entire understanding” of the parties and supersedes all
prior agreements. The facts fit the typical scenario in which corporate agent (say a
salesman) orally negotiates the material terms of an agreement, but then the
corporation expects that the final agreement will be set forth in writing, perhaps
reviewed by its lawyers and other individuals higher up in the corporation.
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The UBS agreement in some ways is even stronger than the ABN
agreement. Plaintiff does not argue that there were two separate agreements, nor
point to any ambiguous phrase. There is no doubt that he carefully considered the
agreement and its terms because he specifically objected to two provisions (noncompete and retention bonus) and had them changed. He therefore knew how to
get a provision included if he thought it was important. See Wright v. Chicago
Title Ins. Co., 554 N.E.2d 511, 514 (Ill. App. Ct. 1st Dist. 1990) (“There is a
strong presumption against provisions that easily could have been included in the
contract but were not.”). Plaintiff has many years experience in the business
world, and consulted a lawyer at some point in this process. He is not
unsophisticated. Perhaps most significantly, when he entered into the UBS
agreement, he had the benefit of his experience with ABN. He had worked there
over a year, referring EFP trades to ABN Bank which generated commissions, yet
ABN never paid him a single dollar. When he asked about the problem, he only
got vague answers from Murphy about “doing his best” to resolve the matter,
answers plaintiff believed were “excuses.” Even after complaining, no payments
were forthcoming. Despite all these red flags, he chose again to rely on an oral
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agreement and did not bother to ask UBS to put in writing the alleged promise to
pay 50% of EFP profits.
Illinois Wage Payment and Collection Act
The parties focused their briefs primarily on the breach of contract claim
and devoted little attention to the second count under the Illinois Wage Payment
and Collection Act (“IWPCA”). UBS argues that it fails for the same reason as the
breach of contract claim -- namely, the alleged oral agreement is barred by the two
integration clauses. Plaintiff in his response brief argues that the IWPCA permits
him to recover compensation based on an informal agreement, something that falls
short of being an enforceable contract. See Pl. Resp. at 17. However, even if the
oral agreement was informal or tentative when it was made, it is undisputed that it
was superseded and terminated by the two later written agreements. Regarding the
bonus money, plaintiff argues that an agreement was formed by past practice.
This argument is not viable because, first, it is undisputed that UBS had final
approval, even if plaintiff’s characterization that it was pro forma is accepted. It
also fails because, as UBS points out, courts have held that the practice of paying a
bonus is not enough to establish an IWPCA claim. See, e.g., Carroll v. Merrill
Lynch, 2011 WL 1838563 *17 (N.D. Ill. May 13, 2011) (granting summary
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judgment to employer on employee’s IWPCA claim because “past practice itself is
not enough to support a wage claim”); Stark v. PPM America, Inc., 354 F.3d 666,
672 (7th Cir. 2004) (granting summary judgment against employee because he
“has no employment contract setting out the terms of his bonus” and he cannot
rely on past practice to “create” an IWPCA claim); see also Brines v. XTRA
Corp., 304 F.3d 699, 703 (7th Cir. 2002) (an employer’s past practice “does not
create an obligation under the principles of contract law”).
Having concluded that summary judgment should be granted on both
claims, this Court need not consider the alternative argument first raised by UBS
in its reply brief. It notes that the Circuit Court of Cook County recently
dismissed similar claims brought by plaintiff in a concurrent lawsuit against both
UBS and ABN. UBS proposed that, if this Court were not inclined to grant
summary judgment, it should instead stay this action under the Colorado River
doctrine and wait until the state court action becomes final, at which time this
Court could dismiss these claims under the doctrine of collateral estoppel.
Plaintiff has not had an opportunity to reply. Given the conclusions stated above,
there is no need to delay this action any further. The defendant’s motion for
summary judgment is granted on both counts.
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IT IS THEREFORE ORDERED that defendant's motion to deem facts
admitted  is denied. Defendant's motion for summary judgment  is
granted. The Clerk of the Court is directed to enter judgment in favor of defendant
and against plaintiff dismissing plaintiff's cause of action with prejudice and
awarding defendant the costs of suit.
UNITED STATES DISTRICT JUDGE
DATED: JUNE 4, 2014
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