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DP SERV., INC. v. AM INTERN.

January 26, 1981

DP SERVICE, INC., PLAINTIFF,
v.
AM INTERNATIONAL ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

  MEMORANDUM OPINION AND ORDER

DP Service, Inc. ("DP") brings this action based on the breach of an alleged distributorship agreement entered into with defendants AM International, Inc. and Jacquard Systems (collectively "AM"). DP's two-count complaint charges breach of contract and tortious interference with prospective economic advantage. AM has moved for dismissal of both counts. For the reasons stated in this memorandum opinion and order, AM's motion is denied as to Count I and granted as to Count II.

Choice of Law

In this diversity case the Illinois substantive law to which this Court looks includes its choice-of-law rules. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Those rules are not the same for the two theories, breach of contract and tort, sought to be invoked by DP's Complaint.

1. Count I: Alleged Breach of Contract

Count I of the Complaint alleges the existence and AM's subsequent breach of a written agreement dated July 1, 1978 establishing DP as a non-exclusive distributor of AM's products in Illinois. AM argues that the alleged agreement is unenforceable because no written agreement was ever signed by AM or any of its agents and because any claimed oral agreement would run afoul of the Statute of Frauds.

Illinois has not yet adopted the "most significant contacts" approach for contract choice-of-law questions, as it has in other areas of substantive law. Nor is there a sufficiently strong indication of so doing in recent Illinois Supreme Court decisions to justify this Court in not following the existing law in this respect.

Accordingly this Court is required to follow the law as set down in such cases as Cook Associates, Inc. v. Colonial Broach & Machine Co., 14 Ill. App.3d 965, 304 N.E.2d 27, 31-32 (1st Dist. 1973): If a contract is to be performed in more than one state, the law of the place of execution applies as to questions of validity, construction and scope as well as performance. Here the alleged Distributorship Agreement*fn1 calls for DP as distributor to perform its activities in Illinois, while it contemplates that AM as manufacturer will manufacture and ship its products to DP "F.O.B. at the Manufacturer's factory" (¶ 4.2) in California. Thus the answer under the Illinois conflicts rule is to look to the place of execution.

On that score the alleged agreement has two provisions:

(1) It states on the cover page, "This Agreement shall first become effective upon the Manufacturer's acceptance of the Distributor's initial order. . . ." — which would be a California act.

(2) Paragraph 15.7 provides, "This Agreement may be executed in counterparts, and whenever signed shall be deemed delivered and executed at Santa Monica, California." Therefore Illinois choice-of-law rules lead to California, the same law that is specified by Paragraph 15.6 of the Distributorship Agreement:

  This Agreement shall be interpreted and governed
  exclusively by California law.

2. Count II: Alleged Tort Liability

DP's second Count sounds in tort. In that area of substantive law Illinois has adopted the "most significant contacts" choice of law rule, Ingersoll v. Klein, 46 Ill.2d 42, 262 N.E.2d 593 (1970). Ingersoll requires consideration of four factors:

(a) place of injury;

(b) place where the conduct occurred;

    (c) place of incorporation and place of business of
  ...

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