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Corroon & Black v. Magner

OPINION FILED JUNE 5, 1986.

CORROON & BLACK OF ILLINOIS, INC., PLAINTIFF-APPELLANT,

v.

THOMAS J. MAGNER ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. David J. Shields, Judge, presiding.

JUSTICE JOHNSON DELIVERED THE OPINION OF THE COURT:

Rehearing denied July 9, 1986.

Plaintiff, Corroon & Black of Illinois, Inc., brought an action in the circuit court of Cook County against defendants, Thomas J. Magner and the Near North Insurance Agency, Inc. (hereinafter Near North). Plaintiff sought injunctive relief and damages from Magner because he allegedly (1) breached his fiduciary duty to plaintiff, (2) breached the restrictive covenant in his employment contract with plaintiff, and (3) interfered with plaintiff's business relationships. Plaintiff sought injunctive relief and damages from Near North because it allegedly (1) encouraged Magner to breach his fiduciary duty to plaintiff, (2) interfered with plaintiff's employment contract with Magner, and (3) interfered with plaintiff's business relationships. The trial court granted defendants' motion for summary judgment. Plaintiff now appeals, contending that the trial court erred in granting summary judgment for defendants.

We reverse and remand.

The record shows that plaintiff is an insurance broker and consultant, specializing in corporate insurance. Plaintiff consists of approximately 220 employees working at several locations in the Chicago area and is one of 25 subsidiaries of Corroon & Black Corporation in 30 States.

Plaintiff hired defendant Magner as an account executive on February 27, 1978. His principal responsibility was to service existing accounts and generate new business. In return, Magner received a yearly salary of $30,000 plus a bonus for new accounts, use of a company car or reimbursement for mileage on his personal car, and partial payment of a membership in a country club.

Richard Schmidt, the president of plaintiff, testified in a deposition that he interviewed Magner for employment. Schmidt testified that he expressly told Magner during the interview that the company would require him to sign its standard employment agreement containing a restrictive covenant. Schmidt further testified that he explained to Magner how the restrictive covenant operated and that the covenant was similar to the one Magner had signed with his former employer.

Robert Margolis, then vice-president in charge of new business development, testified in an affidavit that he also separately interviewed Magner for a position. During this interview, he told Magner that the signing of the company's employment agreement containing the restrictive covenant was a prerequisite for employment. Margolis further testified that between February 28, 1978, and September 24, 1979, he told Magner to sign the agreement on 10 occasions, but that on each occasion Magner avoided signing it; and that Magner signed the agreement on September 24, 1979, after receiving an ultimatum from him.

In contrast, Magner testified in a deposition that although Schmidt and Margolis interviewed him they did not discuss the company's employment agreement. Magner testified that on September 24, 1979, Margolis presented him with the agreement for the first time and told him to sign and return it that afternoon. Magner further testified that he signed the agreement but did not review it in depth.

The restrictive covenant in the employment agreement provided in pertinent part:

"5) MAGNER agrees that he will not, without the prior written consent of Employer, during the term of this Agreement and for 24 months thereafter, except as may be required in the course of his employment hereunder:

(c) directly or indirectly solicit or accept insurance agency or brokerage business from, or perform any of the services included within the Corroon & Black Business for, any client of any Corroon & Black office in which MAGNER has worked."

Defendant Near North is a commercial insurance brokerage house and one of plaintiff's competitors. Magner testified in his deposition that in January 1984 he approached Near North's president, Michael Segal, and indicated that he wished to leave plaintiff and join Near North.

Joseph Kurtiss is the corporate secretary and insurance manager of the Susquehanna Corporation (hereinafter Susquehanna). He testified in a deposition that in December 1983 or January 1984 Magner told him that he was considering leaving plaintiff. Kurtiss stated that Magner obtained Susquehanna's business on behalf of plaintiff on July 1, 1982. Kurtiss further testified that Magner contacted him in May 1984 and repeated his desire to leave plaintiff and join Near North. Magner then asked Kurtiss for permission to bring a representative of Near North to Susquehanna's corporate headquarters in Denver, Colorado, to discuss Near North. Kurtiss agreed.

Kurtiss further testified in his deposition that he, Magner, the vice-president of Near North, and the chief financial officer of Susquehanna attended the Denver meeting later in May 1984. They discussed the background and capabilities of Near North and its ability to service the Susquehanna account. Magner did not inform plaintiff of the Denver meeting.

The record shows that sometime in June 1984 Magner wrote Kurtiss advising Susquehanna on how to prepare notices to its insurance carriers that it was changing brokers. Later that month, Magner received these broker-of-record letters and directed Near North personnel to complete and mail them to Susquehanna's insurance carriers. Near North mailed the letters on June 29, 1984.

The record further shows that Magner resigned from plaintiff corporation in a letter dated June 30, 1984. Bruce O'Neil, president of plaintiff, received the letter on July 2, 1984. Alexander Irvine, executive vice-president of plaintiff, testified in a deposition that on July 2 or 3, Magner visited plaintiff's offices and, in his presence, spoke with O'Neil. Magner told O'Neil that he was taking his accounts with him to Near North. O'Neil reminded Magner of his employment agreement with plaintiff. Magner replied that the restrictive covenant was unenforceable and that he was taking his accounts with him.

After leaving plaintiff, Magner solicited and obtained for Near North the business of several clients whose accounts Magner had serviced while employed by plaintiff, including E.L. Industries, the Plumwood Corporation, Chessies, Inc., and Lennox Trucking.

On July 9, 1984, plaintiff filed motions for a temporary restraining order and a preliminary injunction, and a complaint seeking a permanent injunction and compensatory and punitive damages. The motions for a temporary restraining order and a preliminary injunction sought to enjoin Magner from violating the restrictive covenant by soliciting plaintiff's clients, and to enjoin Near North from using Magner in any way that would violate the restrictive covenant. Plaintiff's complaint for injunctive relief and damages consisted of five counts. Count I alleged that Magner breached his fiduciary duty to plaintiff; count III alleged that Near North tortiously encouraged Magner to breach his fiduciary duty to plaintiff; count II alleged that Magner breached his employment agreement with plaintiff; count IV alleged that Near North tortiously interfered with Magner's employment agreement; and count V alleged that both Magner and Near North tortiously interfered with plaintiff's business relationship with Susquehanna.

The trial court denied the motion for a temporary restraining order on the same day. Prior to the scheduled date for a hearing on the motion for a preliminary injunction, defendants moved for summary judgment on the complaint. After argument on the motion, the court orally ruled in favor of defendants on May 21, 1985. On June 11, 1985, the court entered a written order granting summary ...


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