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J.d. Marshall Internat'l, Inc. v. Fradkin

OPINION FILED JUNE 30, 1980.

J.D. MARSHALL INTERNATIONAL, INC., PLAINTIFF-APPELLANT,

v.

LESLIE FRADKIN ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. FRANCIS T. DELANEY, Judge, presiding.

MR. JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:

Rehearing denied August 15, 1980.

Plaintiff, J.D. Marshall International, Inc., brought this action for injunctive relief against defendants, Leslie Fradkin, Richard Ellis, Aldon International, Inc., and Thomas McShane, seeking to enforce post-employment restrictive covenants and prevent tortious interference with its business relationships. Plaintiff appeals the trial court's allowance of defendants' motions to dismiss the complaint. The court held that the complaint failed to state a cause of action, finding that the restrictive covenants were void as a matter of law. The pleadings reveal the following pertinent facts.

Plaintiff, an Illinois corporation, is engaged in the business of buying products manufactured by various domestic companies and then selling and exporting these products to foreign customers. The business operates primarily under agreements giving plaintiff the exclusive right to export the products of certain domestic suppliers.

Fradkin, Ellis and McShane were employees of plaintiff. Fradkin was employed by plaintiff from March 1, 1976, through December 31, 1978. Fradkin was director of the construction equipment division, and his duties included procuring construction equipment from domestic producers and exporting such products to foreign customers. Fradkin's written employment agreement with plaintiff provided, in relevant part:

"In consideration of the fact that you are employing me as an executive of your company, in a position of confidence, I agree that in the event that my employment is terminated, for any reason whatsoever, I will not for a period of two years, either accept employment or accept to represent, or seek employment with, or seek to represent in any capacity whatsoever, as an office worker, manager, consultant, salesman, sales representative or sales agent — any manufacturer, fabricator, exporter or importer whom you are representing or with whom you have commercial relations at the time of termination of my employment or that you had represented or with whom you had commercial relations during the period of my employment with you."

Ellis was employed on May 2, 1977, through December 31, 1978, as director of plaintiff's power generator set division, and was responsible for buying power generator sets from domestic suppliers for export to foreign customers. McShane, another executive, was hired on August 27, 1977, and was in plaintiff's employ when this action was instituted. Ellis and McShane both executed employment agreements containing the following provisions:

"In consideration of your employing me as an executive of your company in a position of trust and confidence, I agree that in the event my employment is terminated for any reason whatsoever, I will not for a period of two years following the termination of my employment:

(a) directly or indirectly (i) seek or accept employment with any manufacturer, fabricator or supplier with whom I have directly or indirectly contacted during my employment with you; or (ii) represent in any capacity whatsoever as an employee, owner, consultant, salesman, sales representative or agent any manufacturer, fabricator or supplier with whom I have directly or indirectly contacted during my employment with you; and

(b) communicate, furnish, or divulge the identity of any entity with which you have conducted business or any information concerning your business, which information was communicated to me by virtue of my employment with you."

In addition to the post-employment restrictive covenants, each of the three employees agreed that during his period of employment with plaintiff, he would not, without plaintiff's consent, engage in any remunerative or commercial activities other than his work for plaintiff.

On May 22, 1979, plaintiff filed its four-count complaint for injunctive relief against defendants. Count I alleged that, while employed by plaintiff, Fradkin, Ellis and McShane entered into a conspiracy to appropriate plaintiff's business to their own benefit by diverting orders from plaintiff's foreign customers and by causing other companies to fill these orders through purchases from plaintiff's domestic suppliers. Plaintiff charged that in furtherance of this conspiracy, defendants incorporated Aldon for the purpose of receiving and filling orders thus diverted. Plaintiff also alleged that McShane, while employed by plaintiff, procured orders from one of plaintiff's exclusive distributors and diverted the orders to Aldon. Plaintiff accused Ellis and Aldon of having paid or promised to pay McShane a portion of Aldon's profits as compensation for securing these orders.

The complaint also alleged that after leaving plaintiff's employ, Fradkin sought and accepted employment as vice-president of marketing with Whiteman Manufacturing Company; that Whiteman was a manufacturer and fabricator which had supplied construction equipment to plaintiff while Fradkin was employed by plaintiff; that Fradkin willfully, knowingly and maliciously attempted to induce Whiteman to terminate or breach its exclusive export sales agreement with plaintiff by representing to foreign customers that plaintiff's terms for Whiteman's products were unfair; and that such conduct diminished plaintiff's sales of Whiteman's products. Plaintiff also complained that after leaving Marshall, Ellis and Aldon solicited plaintiff's foreign customers to purchase, through Aldon, products manufactured by White Engines, Inc., a supplier with which Ellis had dealt when employed by plaintiff. Ellis allegedly also caused Aldon to place orders for construction equipment with Construction Forms, Inc., another supplier contacted by Ellis while employed by plaintiff.

Plaintiff charged that it had been irreparably injured by the conspiracy and actions taken in furtherance thereof; that it would continue to suffer irreparable injury unless defendants were enjoined; and that it had no adequate remedy at law. Plaintiff thus requested temporary and permanent injunctive relief enjoining Fradkin from further employment by Whiteman; restraining Ellis and Aldon from soliciting plaintiff's foreign customers to purchase products of plaintiff's suppliers through Aldon; enjoining McShane from soliciting and Ellis and Aldon from accepting or filling orders obtained from plaintiff's foreign customers; and restraining Ellis and Aldon from purchasing products for export from Construction Forms, Inc. Count II essentially restated the claim against Fradkin; count III realleged the ...


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