Sunbelt Rentals, Inc. v. Ehlers

915 N.E.2d 862, 394 Ill. App. 3d 421, 333 Ill. Dec. 791, 29 I.E.R. Cas. (BNA) 1475, 2009 Ill. App. LEXIS 918
CourtAppellate Court of Illinois
DecidedSeptember 23, 2009
Docket4-09-0290
StatusPublished
Cited by11 cases

This text of 915 N.E.2d 862 (Sunbelt Rentals, Inc. v. Ehlers) 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
Sunbelt Rentals, Inc. v. Ehlers, 915 N.E.2d 862, 394 Ill. App. 3d 421, 333 Ill. Dec. 791, 29 I.E.R. Cas. (BNA) 1475, 2009 Ill. App. LEXIS 918 (Ill. Ct. App. 2009).

Opinion

JUSTICE STEIGMANN

delivered the opinion of the court:

In February 2009, plaintiff, Sunbelt Rentals, Inc., sued defendants, Neil N. Ehlers III, Sunbelt’s former employee, and Midwest Aerials & Equipment, Inc., Ehlers’ new employer, seeking, in pertinent part, preliminary and permanent injunctive relief. Specifically, Sunbelt claimed that (1) Ehlers violated the restrictive covenants of his employment agreement with Sunbelt when he accepted Midwest’s employment offer and (2) Midwest tortiously interfered with Sunbelt’s employment agreement with Ehlers. The trial court later granted Sunbelt’s motion for a preliminary injunction, enjoining Ehlers and Midwest from violating the restrictive covenants of Ehlers’ employment agreement with Sunbelt.

Ehlers and Midwest appeal, arguing that the trial court abused its discretion by issuing a preliminary injunction because (1) the court failed to follow controlling precedent and (2) Sunbelt did not have a “legitimate business interest” sufficient to support the imposition of a preliminary injunction. In addition, Ehlers also argues that the restrictive covenants in his employment agreement with Sunbelt were overbroad and unenforceable. Because we (1) reject the “legitimate-business-interest” test and (2) conclude that the restrictive covenants in Ehlers’ employment agreement were reasonable as to time and territory, we affirm.

I. BACKGROUND

A. Ehlers’ Employment With Sunbelt

In May 2003, Ehlers was offered, and he accepted, a sales representative position with Sunbelt. Sunbelt engaged in the business of renting and selling industrial equipment to commercial and residential customers in 400 nationwide branches, including Bloomington and Champaign. As a Sunbelt sales representative, Ehlers was responsible for (1) developing and maintaining a customer base with construction, agricultural, and industrial clients and (2) all aspects of the client relationship, including sales, rentals, negotiations, scheduling, delivery, and billing.

In June 2003, Ehlers entered into a written employment agreement with Sunbelt, which contained, in pertinent part, the following restrictive covenants:

“5.2 During the term of this [a]gree-mended [sic] and for a period of one *** year after the date of the expiration or termination of this Agreement for any reason (the ‘ [restrictive [p]eriod’), [Ehlers] shall not directly or indirectly:
(ii) provide or solicit the provision of products or services, similar to those provided by [Sunbelt] at the ‘[designated [s]tores’ (as defined below), to any person or entity who purchased or leased products or services from [Sunbelt] at any time during the [12] calendar months immediately preceding the termination or expiration of this Agreement for any reason and for or with whom [Ehlers] had contact, responsibility^] or access to [confidential [Information related to such person or entity; provided, however, the restriction of this subsection *** shall be limited in scope to the ‘[t]erritory’ (as defined below) and to any office, store[,] or other place of business in which *** [Ehlers] has had business contact with such persons or entities during the [12] calendar months immediately preceding the termination or expiration of this Agreement for any reason.
(iv) compete with [Sunbelt], its successors[,] and assigns by engaging, directly or indirectly, in the [b]usiness as conducted at the [designated [s]tores or in a business substantially similar to the [b]usiness as conducted at the [designated [s]tores, within the ‘[territory.’ ***
(v) provide information to, solicit or sell for, organize or own any interest in (either directly or through any parent, affiliate, or subsidiary corporation, partnership, or other entity), or become employed or engaged by, or act as agent for any person, corporation, or other entity that is directly or indirectly engaged in a business in the ‘[territory’ ***, which is substantially similar to the [b]usiness as conducted at the [designated [s]tores or competitive with [Sunbelt’s] [b]usiness as conducted at the [designated [s]tores
As used herein, the ‘[Rerritory’ means: the geographical area within a [50-]mile radius of any of [Sunbelt’s] stores in which, or in connection with which, [Ehlers] performed or was responsible for performing services at any time during the [12-]month period immediately preceding the termination or expiration of this Agreement for any reason (the ‘[designated [s]tores’).
5.3 In the event of a breach or threatened breach by [Ehlers] of any of the [restrictive [covenants contained in this [paragraph [five], [Sunbelt], in addition to and not in derogation of any other remedies it may have, shall be entitled to any or all of the following remedies:
5.3.1 It is stipulated that a breach by [Ehlers] of the [Restrictive [Rovenants would cause irreparable damage to [Sunbelt]; [Sunbelt], in addition to any other rights or remedies which [it] may have, shall be entitled to an injunction restraining [Ehlers] from violating or continuing any violation of such [Restrictive [Rovenants; such right to obtain injunctive relief may be exercised, at the option of [Sunbelt], concurrently with, prior to, after, or in lieu of, the exercise of any other rights or remedies which [Sunbelt] may have as a result of any such breach or threatened breach ***.” (Emphasis omitted.)

Ehlers performed his sales representative duties for Sunbelt at its Bloomington branch until March 2008, at which time Sunbelt transferred him to its Champaign branch, where Ehlers continued to perform his sales responsibilities.

B. Ehlers’ Employment With Midwest

In early January 2009, Ehlers responded to an employment advertisement from Midwest, which rented and sold aerial work platforms to industrial and construction customers. Shortly thereafter, Ehlers accepted Midwest’s offer to work as a sales representative in its Bloomington office. On January 16, 2009, Ehlers tendered his written resignation to Sunbelt but did not provide a reason for his departure. That same day, Sunbelt accepted Ehlers’ resignation and terminated his employment.

On January 20, 2009, after determining that Ehlers had accepted a sales position with Midwest, Sunbelt, through its corporate counsel, sent Ehlers a letter requesting that he “cease and desist” violating the terms of the restrictive covenants in his employment contract with Sunbelt. That same day, Sunbelt’s counsel also sent a copy of the “cease and desist” letter to Midwest, which Sunbelt considered a direct competitor. Shortly thereafter, Sunbelt’s Champaign branch manager saw Ehlers deliver industrial equipment to a Sunbelt client on Midwest’s behalf.

C. The Trial Court’s Determination

In February 2009, Sunbelt sued Ehlers and Midwest seeking, in pertinent part, preliminary and permanent injunctive relief.

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Bluebook (online)
915 N.E.2d 862, 394 Ill. App. 3d 421, 333 Ill. Dec. 791, 29 I.E.R. Cas. (BNA) 1475, 2009 Ill. App. LEXIS 918, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunbelt-rentals-inc-v-ehlers-illappct-2009.