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Scheduling Corp. of America v. Massello

OPINION FILED NOVEMBER 8, 1983.

SCHEDULING CORPORATION OF AMERICA, PLAINTIFF AND COUNTERDEFENDANT-APPELLANT,

v.

MICHAEL F. MASSELLO, DEFENDANT AND COUNTERPLAINTIFF-APPELLEE — (NATIONAL BUSINESS CONSULTANTS, DEFENDANT-APPELLEE).



Appeal from the Circuit Court of Cook County; the Hon. Joseph M. Wosik, Judge, presiding. JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

Rehearing denied December 7, 1983.

Scheduling Corporation of America (SCA) sought to enjoin defendant Michael F. Massello from using SCA sales information and from breaching his covenant not to accept employment from present and former SCA clients within a year after leaving SCA's employ. SCA amended its complaint to include Massello's corporation, National Business Consultants (NBC), as a defendant and to drop all claims for relief except for money damages. Massello counterclaimed for compensation allegedly due him by SCA. Following a bench trial, judgment was entered against SCA and for Massello in the amount of $165,619.50. SCA appeals.

Plaintiff SCA provides management efficiency services which include scheduling systems to improve a business' efficiency and to allow monitoring by management. Hereinafter, the services provided by SCA will be referred to collectively as "scheduling" services.

Defendant Massello began working for SCA in 1974. Massello moved into sales in 1976 and soon took over the primary sales responsibilities for the company. As part of his sales efforts, Massello kept certain records which consisted of index cards, "hot lists," and correspondence files. The index cards contained the names of about 200 prospective clients. These cards, which were prepared by Massello, also contained the names of key contacts and personal observations regarding the best means of "selling" the prospect and as to the prospect's "temperature" (receptivity). The hot lists were prepared periodically by Massello for George Stout, SCA's president, to inform him which clients were interested in SCA's services. The information on the hot lists was gleaned from the index cards. The correspondence files contained written communications between Massello and the prospective clients. Massello also had in his possession client lists which were prepared by SCA's office staff.

In January of 1974, all SCA employees, including Massello, entered into an "Agreement" with SCA which was terminable at will by either party with notice and without cause. The agreement stated that the list of SCA's clients is an important and valuable asset and contained a promise that the employee will not disclose to outsiders either the client list or information learned about clients.

Upon moving into sales in 1977, Massello and SCA entered into a "Compensation Agreement for 1977" which provided for a base salary of $26,000 a year plus two commission plans, one for 5% and the other for 2 1/2%. Massello was to receive 5% on what may generally be referred to as "cold sales," i.e., sales without introduction from another source and all referrals from 5% clients which resulted in a sale. He was to receive 2 1/2% on all other sales which included extensions of work within the same project and sales resulting from referrals from 2 1/2% clients. Both the 2 1/2% and 5% commissions were to be paid when SCA received payment from the client.

Massello received compensation as set forth under the 1977 agreement up through February 1979. In 1977, Massello received between $70,000 and $80,000 including salary. In 1978, Massello was paid $135,000 including salary. Up to March 23, 1979, Massello received between $40,000 and $50,000.

On March 23, 1979, Massello received his paycheck for the preceding four-week period. The check did not include the 21/2% commissions for that period which came to approximately $9,000. Massello asked Stout's secretary to explain the omission and she stated that Stout informed her that he (Massello) would no longer receive the 2 1/2% commission. Massello contacted Stout in Florida but apparently received no satisfactory explanation for Stout's change in Massello's compensation arrangement. Massello continued to perform his duties until April 5, 1979, when he tendered his letter of resignation.

At the time of his resignation, Massello took with him the sales information in his possession, including the index cards. On April 9, four days after the resignation, Stout made a written demand for the return of the sales information taken by Massello. Massello returned the index cards immediately, but not before deleting comments regarding his personal opinion of certain contacts. He testified that he did not want those comments revealed to his contacts. Massello returned the hot lists and client lists to SCA in November 1979, pursuant to a discovery order. The hot lists were several months or years old at the time of Massello's resignation and the client lists were copies of lists produced by the SCA staff.

Following his resignation, Massello formed his own scheduling firm, National Business Consultants. As part of NBC's sales force, Massello hired James Conklin, Harry Wilkins, Dwight Gressel, and Daniel Schreiber, all former SCA employees. Massello spoke to Conklin about coming to work for NBC in August or September of 1979 and Conklin began to work for NBC on September 21, 1979. Conklin, in turn, talked to Wilkins, Gressel, and Schreiber in November 1979 about coming to NBC, which they did.

In the year following Massello's resignation, Massello and the former SCA employees solicited the employment of several of SCA's prospective, present, and former clients, including several Blue Cross/Blue Shield plans. There are 110 such plans nationwide and, up to 1979, SCA had sold its services to eight of them, which accounted for between 50% to 60% of SCA's business. During Massello's employment with SCA, he contacted approximately 75 Blue Cross plans. He contacted 17 of these plans within the year after he left SCA, but none of them bought NBC's services. Massello and his employees also contacted several other SCA prospects, but none of them hired NBC.

SCA filed suit to enjoin Massello from soliciting their present and former clients. Massello counterclaimed for compensation allegedly due him. SCA thereafter amended their complaint to join NBC as a defendant and to drop all claims for relief except damages. Following a bench trial, the court ruled against SCA and in favor of Massello, who was awarded the $165,619.50 sought in his counterclaim. SCA then instituted this appeal.

SCA first contends that Massello's retention of SCA sales information after his resignation constituted a wrongful conversion of SCA property. The subject of the alleged conversion was sales information consisting of the index cards, hot lists and client lists kept by Massello. The index cards were returned upon demand but not before certain deletions were made. The client lists were returned in November of 1979 pursuant to a discovery order. At that time, the hot lists which Massello had not disposed of were also returned. SCA contends that Massello's retention of these lists and cards injured its sales efforts.

• 1, 2 The elements of an action for conversion are (1) an unauthorized and wrongful assumption of control, dominion, or ownership by a person over the personalty of another; (2) his right in the property; (3) his right to immediate possession of the property; and (4) a demand for possession thereof. (Farns Associates Inc. v. Sternback (1979), 77 Ill. App.3d 249, 252, 395 N.E.2d 1103.) A conversion can occur when property is wrongfully acquired or wrongfully retained. (See Hobson's Truck Sales, Inc. v. Carroll Trucking, Inc. (1971), 2 Ill. App.3d 978, 981-82, 276 N.E.2d 89.) The fact that the property has no market value does not restrict the recoverable damages if they are attainable in some rational way. See Long v. Arthur Rubloff & Co. (1975), 27 Ill. App.3d 1013, 1025, 327 N.E.2d 346.

• 3 In the instant case, Massello admitted that when he took the lists and cards he was aware that they were property to which SCA was entitled. SCA demanded the return of the sales information four days after Massello's ...


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