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ROBERTSON v. R.B.A. INC.

August 23, 1985

J. ROBERT ROBERTSON, PLAINTIFF,
v.
R.B.A. INC., A CORPORATION, R.B.A. INC., D/B/A STAUFFER SEED, INC., AND STAUFFER CHEMICAL CO., A CORPORATION, DEFENDANTS.



The opinion of the court was delivered by:  Allen Sharp, Chief Judge[fn*]. [fn*] Sitting by designation pursuant to 28 U.S.C. § 292.

MEMORANDUM AND ORDER

This cause is before the court on the motion for partial summary judgment of defendants, R.B.A. Inc., and Stauffer Chemical Co. (both Stauffer) filed March 15, 1985. Stauffer moves for summary judgment on Counts I, II, IV, V, VI, VII, VIII, IX, XI, XII, XIII and XIV of the Second Amended Complaint. For the reasons set forth below, defendants motion for partial summary judgment is granted with respect to Counts I, IV, V, VI, VIII, XI, XII, XIII; such motion is denied with respect to Counts II, VII, and IX and XIV.

I.

In the time period relevant to this motion, plaintiff, J. Robert Robertson (Robertson) was a Vice President of R.B.A. Inc., a Minnesota Seed Company in bankruptcy. On September 22, 1980, Stauffer Chemical Co. acquired R.B.A. Inc. and entered into a written employment contract retaining Robertson as Area Marketing Manager to serve at the pleasure of the board for a salary of Fifty-five thousand and no/100 Dollars ($55,000.00). In dispute in this action is the length of the fixed term of the contract. The original contract retained by Stauffer reads as follows:

  2. Term: The term of this Agreement shall begin on the
    effective date hereof and shall continue for a period of two
    (2) years.

Robertson maintains that the term of the contract was for a period of three (3) years.*fn1

Testimony varies as to the circumstances surrounding the execution of Robertson's employment contract. However, the parties agreed to the following changes: (1) the original salary term of Fifty Thousand and oo/100 Dollars ($50,000.00) was changed to Fifty-five thousand and oo/100 Dollars ($55,000.00); (2) the restrictive covenant was changed from two (2) to three (3) years; and (3) the title of the position was changed from Director of Marketing to Manager of Marketing.

Robertson was relieved of all his duties with Stauffer on or about October 5, 1981. Although he did not function in any capacity with Stauffer for the next year, Stauffer continued to pay him a salary until the expiration of the two (2) year contract term on or about September 22, 1982. Robertson commenced this action on November 8, 1982 in the Circuit Court for the County of Sagamon, Case No. 82-L-420, entitled J. Robert Robertson v. Stauffer Chemical Company. Soon thereafter on December 12, 1982, Stauffer removed this cause to this court pursuant to 28 U.S.C. § 1441. Stauffer filed its motion for partial summary judgment on March 15, 1985 and the accompanying brief on March 20, 1985. Robertson's response was docketed May 8, 1985. On May 28, 1985, this court heard oral argument on this motion in Springfield, Illinois and granted the parties leave to file supplemental authority. Subsequently, Stauffer filed a supplement to it original memorandum in support of its motion for partial summary judgment on May 24, 1985. Jurisdiction of this court is predicated upon 28 U.S.C. § 1332(a)(1).

II.

A.

A threshold issue that must be addressed by this court is the choice of law to be applied in this diversity action. Stauffer contends that Minnesota law applies here. It relies on the contract provision that specifies that the document be governed by the law of Minnesota. Robertson maintains that choice of law provision in the contract must yield to the law of the forum state (Illinois) where there is a fundamental public policy which would be violated if that law were not applied. In addition, plaintiff contends that the contract is an "adhesion contract" and the choice of law provision should be unenforceable on that basis.

In a diversity case, a federal court must follow the conflict of laws principle of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In Illinois, where the parties expressly choose another state's law to govern their contract, their expressed choice will be honored. Hofeld v. Nationwide Life Insurance Company, 59 Ill.2d 522, 322 N.E.2d 454, 458 (1975); Swanberg v. Mutual Benefit Life Insurance Company, 79 Ill. App.3d 81, 34 Ill. Dec. 624, 627, 398 N.E.2d 299, 302 (1979); Tele-Controls, Inc. v. Ford Industries, Inc., 388 F.2d 48, 51 (7th Cir. 1967); Carter v. Catamore Company, Inc., 571 F. Supp. 94, 95 (N.D.Ill. 1983).

To circumvent this rule, Robertson argues that the "most significant contacts" test is applicable in this situation. He contends that the contract provision is but one factor to be considered by this court in determining which jurisdiction has the most significant contacts with the matter at issue. He concludes that in this case where the substantive law of Illinois and Minnesota are the same, Minnesota law will govern the issue. Where the law expresses a different policy between the two states, Illinois law will govern since Illinois is the state of performance and has the most interest in the action.

This court does not agree with Robertson's conclusions on the choice of law question. Initially, the court observes that the "most significant contacts" test has not be extended to contract actions in the state of Illinois. Charles O. Finley & Co. v. Kuhn, 569 F.2d 527, 547 (7th Cir. 1978); International Paper Co. v. Grossman, 541 F. Supp. 1236, 1239-40 (N.D.Ill. 1978). Robertson cites P.S. & E Inc. v. Selastomer Detroit, Inc., 470 F.2d 125 (7th Cir. 1972) in support of his position that the "most significant contacts" test is the correct conflict of law principle to be applied here. The court finds P.S. & E. Inc. distinguishable from this action in several respects. First, the agreement in P.S. & E Inc. contained no express contract provision setting out the law to be applied in determining the validity of the contract and the rights created by the document. Second, the factual situation in P.S. & E Inc. was such that no existing Illinois authority would clearly govern the case. Under Illinois conflict of law principles, if more than one place of performance is involved, the place of the making of the contract governs its construction and obligations. Id. at 127. In P.S. & E. Inc., ...


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