Cambridge Engineering, Inc. v. Mercury Partners 90 BI, Inc.

879 N.E.2d 512, 378 Ill. App. 3d 437, 316 Ill. Dec. 445, 27 I.E.R. Cas. (BNA) 68, 2007 Ill. App. LEXIS 1276
CourtAppellate Court of Illinois
DecidedDecember 7, 2007
Docket1-06-0798 Rel
StatusPublished
Cited by91 cases

This text of 879 N.E.2d 512 (Cambridge Engineering, Inc. v. Mercury Partners 90 BI, Inc.) 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
Cambridge Engineering, Inc. v. Mercury Partners 90 BI, Inc., 879 N.E.2d 512, 378 Ill. App. 3d 437, 316 Ill. Dec. 445, 27 I.E.R. Cas. (BNA) 68, 2007 Ill. App. LEXIS 1276 (Ill. Ct. App. 2007).

Opinion

JUSTICE JOSEPH GORDON

delivered the opinion of the court:

This is a suit for attorney fees and punitive damages incurred in seeking legal enforcement of a contractual covenant not to compete. In a prior action filed in Missouri in 2001, plaintiff-appellant, Cambridge Engineering, Inc. (Cambridge), prevailed in a suit to enjoin former employee Gregory Deger from engaging in certain sales-related activities for his new employer, Mercury Partners 90 BI, Inc., d/b/a Brucker Company (Brucker). Thereupon, Cambridge filed the instant lawsuit against the employer Brucker, seeking compensatory and punitive damages against Brucker for tortious interference with contract; those damages included recovery of the fees it expended in the Missouri injunction action against Deger. Prior to trial, the parties stipulated to limit the claim for compensatory damages solely to attorney fees, but let the action for punitive damages stand. The trial court directed a verdict against Cambridge on its claim for punitive damages, and it entered judgment notwithstanding the verdict (judgment n.o.v.) against Cambridge on the issue of liability. Cambridge now appeals both the judgment n.o.v. with respect to its right to recover fees and the directed verdict with respect to punitive damages. For the reasons that follow, we affirm.

I. BACKGROUND

On March 27, 2002, Cambridge filed its first amended complaint against Brucker, in which it sought damages for tortious interference with contract. The complaint alleges that Cambridge is a Missouri corporation, engaged in the business of manufacturing and selling commercial and industrial gas direct fired space heating and make-up air heating equipment; Brucker is an Illinois corporation that serves as a manufacturers’ representative and wholesaler of heating, ventilation, and air conditioning equipment and competes with Cambridge in the Midwest region.

Beginning in 1996, Cambridge employed Deger as a sales representative in northern Illinois and Indiana. His employment agreement contained both noncompetition and nonsolicitation covenants. On April 21, 2001, Cambridge terminated Deger’s employment for good cause. Subsequently, on or before June 29, 2001, Brucker allegedly hired Deger to compete with Cambridge and to solicit Cambridge’s customers, in violation of the restrictive covenants in his contract with Cambridge.

Cambridge further avers that during Deger’s interviews for employment with Brucker, Deger told Brucker’s president David Sobut that his contract with Cambridge had contained a noncompetition clause. In addition, upon learning of Deger’s employment with Brucker, Cambridge sent a letter to Brucker informing it of the restrictive covenants in Deger’s contract and demanded that Deger cease all competitive activities. Nevertheless, Brucker continued to employ Deger, and it “intentionally and without justification” assisted Deger in violating the restrictive covenants so that it could gain a competitive advantage against Cambridge.

As a result of this conduct, Cambridge sought injunctive enforcement of the restrictive covenants in the circuit court of St. Louis County, Missouri (the St. Louis court). On October 11, 2001, the St. Louis court permanently enjoined Deger from taking any action that would violate the restrictive covenants in his employment contract with Cambridge.

A copy of the employment agreement between Deger and Cambridge is attached to the complaint as Exhibit A. It has several provisions that are relevant to the case at hand. Section 7, entitled “Post-Termination Protection of Employer’s Confidential Information and Business Interests,” contains the restrictive covenants that Deger allegedly violated:

“c. *** Employee shall not, for a period of 24 months following the termination of his/her employment, whether as principal, employee, independent contractor or otherwise, in any way, directly or indirectly, engage in any activity for or on behalf of Employer’s competitors, or engage in any business that competes with Employer, anywhere in the United States or Canada.
d. Employee shall not, for the same period, either directly or indirectly, contact or communicate with any customer, employee or representative of Employer for any purpose that is or may be detrimental to Employer, including without limitation, to engage in sales activities, employment recruitment, or solicitation of any kind.”

In addition, section 9(d) contains a choice of law provision:

“This agreement *** and the entire relationship of the parties, shall be governed by the laws of the State of Missouri.”

Finally, section 9(e) provides for judicial reformation of the agreement when necessary:

“This Agreement shall be interpreted to give the fullest effect to its provisions consistent with controlling law. If any term or provision shall be deemed invalid or unenforceable by a court of competent jurisdiction, then such term of provision shall be automatically amended to be effective to the fullest extent permitted by law, and the adjudicating court shall have authority to modify any such term or provision to accomplish said purpose and intention. The remainder of this agreement shall continue in full force and effect as if such modification had always been part of the Agreement.”

Also attached to the complaint as Exhibit B is the final injunction issued by the St. Louis court against Deger. The caption of the case is “Cambridge Engineering, Inc. v. Greg Deger”; Brucker is not a named party. In handing down the injunction against Deger, the court found the restrictive covenants in the employment agreement to be valid, stating: “Cambridge has a protectable interest in its customers underlying the restrictive covenants. Deger’s employment with Brucker and his admitted solicitation of Cambridge customers violates the restrictive covenants. The geographic and temporal scope of the restrictive covenants is reasonable.”

In its answer to the complaint, Brucker admits that it hired Deger, but it denies that Deger was competing with Cambridge or soliciting Cambridge customers on behalf of Cambridge’s competitors. Brucker also avers that Deger told Brucker that he had been terminated without cause and that Deger’s statement was supported by the State of Illinois Department of Employment Security Appeals Referee’s Decision (Referee’s Decision) regarding Deger’s unemployment benefits. In addition, Deger’s attorney gave Brucker a court case (Showe-Time Video Rentals, Inc. v. Douglas) and told Brucker that under the law as described in that case, the restrictive covenant in Deger’s contract was unenforceable.

With respect to the St. Louis case, Brucker admits that the St. Louis court entered a permanent injunction against Deger, but it argues that the decision was “strictly against Deger.” Upon learning of that order, Brucker fired Deger.

Attached to the answer is a copy of the Referee’s Decision.

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Bluebook (online)
879 N.E.2d 512, 378 Ill. App. 3d 437, 316 Ill. Dec. 445, 27 I.E.R. Cas. (BNA) 68, 2007 Ill. App. LEXIS 1276, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cambridge-engineering-inc-v-mercury-partners-90-bi-inc-illappct-2007.