Sloan Biotechnology Laboratories, LLC v. Advanced Biomedical Incorporated

2018 IL App (3d) 170020
Appellate Court of Illinois·Decided July 9, 2018·No. 3-17-0020·Published·Cited by 5 cases

Opinion

Digitally signed by Reporter of Decisions Reason: I attest to the Illinois Official Reports accuracy and integrity of this document Date: 2018.06.14 Appellate Court 10:59:03 -05'00'

Sloan Biotechnology Laboratories, LLC v. Advanced Biomedical Inc., 2018 IL App (3d) 170020

Appellate Court SLOAN BIOTECHNOLOGY LABORATORIES, LLC, an Illinois Caption Limited Liability Company, Plaintiff-Appellant, v. ADVANCED BIOMEDICAL INCORPORATED, a Delaware Corporation, Defendant-Appellee.

District & No. Third District Docket No. 3-17-0020

Filed March 14, 2018

Decision Under Appeal from the Circuit Court of Peoria County, No. 16-MR-478; the Review Hon. Katherine Gorman Hubler, Judge, presiding.

Judgment Reversed and remanded.

Counsel on Lane G. Alster, John S. Elias, and Janaki H. Nair, of Elias, Meginnes Appeal & Seghetti, P.C., of Peoria, for appellant.

Daniel M. Cordis and James P. Lawson, of Cordis & Cordis, of Princeville, and Deborah J. Michelson and David A. Kunselman, of Miller Goler Faeges Lapine LLP, of Cleveland, Ohio, for appellee.

Panel PRESIDING JUSTICE CARTER delivered the judgment of the court, with opinion. Justices Lytton and Schmidt concurred in the judgment and opinion. OPINION

¶1 Plaintiff, Sloan Biotechnology Laboratories, LLC (Sloan), brought a declaratory judgment action against defendant, Advanced Biomedical Incorporated (ABI), seeking a ruling from the trial court that Sloan was not in breach of its contract with ABI. Citing a forum selection clause in the parties’ contract, ABI filed motions to either transfer venue to the state court in Cuyahoga County, Ohio, or to dismiss the case. Following a hearing, the trial court granted ABI’s request and transferred venue to the Ohio state court. Sloan filed a motion to reconsider and asked the trial court to reverse its prior ruling or, in the alternative, to amend its prior ruling to show that the case had been dismissed rather than transferred. After a hearing, the trial court granted the motion to reconsider in part, reversed the prior ruling in its entirety, and entered an order dismissing Sloan’s complaint for declaratory judgment. Sloan appeals. We reverse the trial court’s judgment and remand for further proceedings.

¶2 FACTS ¶3 Sloan was an Illinois limited liability company and had its principal place of business in Peoria, Illinois. ABI was a Delaware corporation and had its principal place of business in Dublin, Ohio. In March 2015, Sloan entered into an exclusive manufacturing agreement (manufacturing agreement) with ABI wherein Sloan agreed to manufacture a nonalcohol based hand sanitizer lotion and derivatives of that product for ABI. The manufacturing agreement incorporated by reference a prior nondisclosure agreement (NDA) that had been entered into between the parties in June 2014 (the 2014 NDA was entered into between Sloan and ABI’s predecessor and was later assigned to ABI). The following year, the parties entered into another NDA, which was substantially the same as the prior NDA. The manufacturing agreement and the two NDAs constituted the parties entire agreement (collectively referred to as the contract) for the purposes of this appeal. ¶4 In June 2016, Sloan filed the instant declaratory judgment action against ABI in the state trial court in Peoria County, Illinois. In addition to most of the information set forth above, Sloan alleged in its complaint that (1) it had performed all of its obligations under the parties’ contract and (2) ABI had delivered to Sloan a demand letter claiming that Sloan had breached the contract and demanding that Sloan take (or refrain from taking) certain actions. Sloan asked the trial court to enter a declaration that Sloan had not breached the contract. Copies of the parties’ contract (the manufacturing agreement and the two NDAs) and the demand letter were attached to the declaratory judgment complaint as supporting documents. ¶5 Of relevance to this appeal, the manufacturing agreement contained the following provisions: “12. CONFIDENTIALITY. The parties hereto acknowledge and agree that the information contained in this Agreement and all exhibits hereto is considered ‘Confidential Information’ as such term is defined in the June 17, 2014 Restatement of Non-Disclosure Agreement between SLOAN and ABI (the ‘NDA Agreement’) and is governed by the terms of such NDA Agreement. The parties further acknowledge and agree that June 17, 2014

-2- Restatement of NDA Agreement remains in full force and effect and is hereby incorporated by reference as if fully set forth in this Agreement. *** 16. GOVERNING LAW. This Agreement shall be deemed made in Peoria, Illinois, and the validity and interpretation thereof shall be governed by the laws of the state of Illinois without regard to its conflict of law principles.” The manufacturing agreement did not, however, contain a forum selection clause. ¶6 Also of relevance to this appeal, the NDAs contained the following provisions: “11. Governing Law. The validity, performance, construction and effect of this Agreement will be governed by the laws of Ohio and the federal laws of the United States, without regard to conflict of laws. If any international treaties or conventions are applicable to this Agreement, then the parties, to the greatest extent possible, shall opt out of such treaties and conventions being applied to this Agreement. This Agreement may be enforced in the courts sitting in Cuyahoga County, Ohio, and in other courts and before other bodies to the extent required to protect the Disclosing Party’s [ABI’s] rights. The prevailing party in any litigation relating to this Agreement or a party’s performance hereunder shall be entitled to recovery of its reasonable legal fees and all of its reasonable costs and expenses incurred in connection with the litigation. 12. Equitable Remedies. The Parties recognize that serious injury could result to the Disclosing Party [ABI] and its business if the Receiving Party [Sloan] breaches its obligations under this Agreement. Therefore, Receiving Party agrees that the Disclosing Party will be entitled to a restraining order, injunction or other equitable relief, the scope and extent of which shall be determined by a court of competent jurisdiction, sitting in Cuyahoga County, Ohio, if Receiving Party breaches its obligations under this Agreement, in addition to any other remedies and damages that would be available at law or equity. *** 16. Miscellaneous. The headings used in this Agreement are for reference and convenience only and will not enter into the interpretation of this Agreement. This Agreement shall not be construed against either Party as the drafter of this Agreement.” ¶7 In July 2016, ABI filed a motion to transfer venue in this case to Cuyahoga County, Ohio. ABI also filed, in the alternative, a motion to dismiss the case pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2016)). In the motions, ABI alleged that (1) earlier that month, it had filed a lawsuit against Sloan in the state court in Cuyahoga County, Ohio, for breach of the manufacturing agreement and the NDAs and for injunctive relief “inextricably intertwined with the issues raised by Sloan” in the present case; (2) the terms of the NDAs provided for exclusive venue in Cuyahoga County, Ohio; (3) it was unclear under Illinois law whether transfer or dismissal was the appropriate remedy, so ABI filed a motion requesting each remedy in the alternative; and (4) in addition to the forum selection clause, dismissal under section 2-615 of the Code was also appropriate because Sloan had failed to state a claim for declaratory relief in its complaint in

-3- that it had alleged insufficient facts and was improperly seeking a declaration of nonliability for past conduct.

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