The opinion of the court was delivered by: BRIAN BARNETT DUFF
On November 17, 1993, The Wellness Community-National ("Wellness C") sued The Wellness Community Chicago-Western Suburbs ("Wellness H"), alleging breach of contract. Between July 18 and 20, 1994, we held a bench trial. On August 5, 1994, Wellness C and Wellness H each submitted proposed findings of fact and conclusions of law ("FF & CL"). Pursuant to Fed. R. Civ. P. 52, we make our own findings and conclusions, which we discuss below.
Established in 1982, Wellness C is a California not-for-profit, charitable corporation with its principle place of business in Santa Monica, California. Trans. at 29. It provides "free psycho-social support to adults with cancer as an adjunct to conventional medical treatment." Amend. Compl. at P 1; Pl. Ex. 12. In other words, according to one of its brochures, it "is a place where people with cancer learn to join with their physicians and other health care professionals rather than acting as hopeless, helpless, passive victims of the illness." Pl. Ex. 12. Wellness C and its affiliates have provided support to over 25,000 people. Id. As of October 20, 1993, it had affiliates in numerous California locations, plus in St. Louis, Cincinnati, Boston, Philadelphia, Baltimore, and Knoxville. Pl. Ex. 27. For its good deeds, it has received extensive international and national publicity. Trans. 47-50. Participants and donors "by and large refer to it as Wellness." Trans. at 45.
On July 13, 1989, Wellness C entered into a Charter Agreement ("Agreement") with the then The Wellness Community Chicago-Western Suburbs ("Wellness C CWS"). By signing the Agreement, Wellness C CWS "agree[d] that its sole purpose [was] to carry out The Wellness Community program . . . in the Western Suburban area of Chicago, Illinois . . ., in accordance with the 'General Guidelines.'" Pl. Ex 1 at § 1. Those Guidelines provide that "inasmuch as [Wellness C] has established a reputation for integrity, service and effectiveness, it is concerned that no organization chartered by it do anything which would impair such reputation. Therefore, in addition to the foregoing provisions of this [Agreement], [Wellness C CWS] agrees to model all of its activities upon the guidelines and standards promulgated from time to time by [Wellness C] . . . ." Pl. Ex 1 at § 14. The Guidelines also provide that, in return, Wellness C would contribute "train[ing]", "assist[ance]", "supplies", "advertising", and other support to Wellness C CWS. Pl. Ex. 1 at § 3.
In this case, however, the central provision is Section 8:
This [Agreement] may be revoked by [Wellness C] or terminated by [Wellness C CWS] for any reason whatsoever upon giving ninety (90) days written notice. It is agreed that any termination of this [Agreement] shall be deemed a revocation of the [Agreement] by [Wellness C]. Immediately upon giving notice or receiving notice of revocation, [Wellness C CWS] shall take all steps so that the words "The Wellness Community" and all similar words which might prove confusing to the public shall be deleted from all of [Wellness C CWS's] activities of any and all types and kinds, and [Wellness C CWS] shall immediately take all steps as are necessary so that all persons will know that [Wellness C CWS] is no longer associated with [Wellness C] and, from that point in time on, neither [Wellness C CWS] nor anyone associated with [Wellness C CWS] shall under any circumstances indicate that it is affiliated in any way with [Wellness C] . .
After signing the Agreement, Wellness C CWS began operations as an Illinois not-for-profit, charitable corporation with its principle place of business in Hinsdale, Illinois. As it operated, the local community became increasingly aware of its name. Trans. at 261-70. In fact, a series of surveys shows that the community's awareness rose from "something like 41 and a half percent" in 1991 to "something apparently in the mid to upper 50s" in 1993. Trans. at 264, 269. During those years, under the name Wellness C CWS, it received $ 2,700,000 in donations. Ans. to Amend. Compl. at 12.
Yet in July and August 1993, Wellness C CWS had "serious discussion[s] at the board level" about disaffiliating from Wellness C. Trans. at 172. Then, in an October 4, 1993, letter, Wellness H informed Wellness C of its desire to disaffiliate, writing that it "hereby terminates The [Agreement] effective 90 days following your receipt of this notification. " Pl. Ex. 19. "A principle reason for Wellness [H's] decision to terminate its affiliation with [Wellness C] was the firm position of [Dr. Harold] Benjamin
that there is only one way to measure the success or failure of the Wellness Community Program." Def. Prop. FF & CL at 10-11. Wellness H considered "[Wellness C's] measure of success . . . to be 'irresponsible.'" Id. at 11. Wellness H "firm[ly] believed that [it] could provide a better program for its participants only if its program was subject to outside assessment." Id.
In its October 4 letter, Wellness H wrote that it "is proceeding with the necessary steps to comply with the provisions of Section 8 of The [Agreement]." Pl. Ex. 19. In its October 6, 1993, response letter, Wellness C wrote that it "wish[ed] [Wellness H] the best of luck" and was "sure that [Wellness H] would take all the 'steps' provided for in [Section] 8 as soon as possible." Pl. Ex. 20.
The steps included the renaming process. Actually, Wellness H initiated that process before it announced its desire to disaffiliate. At six or seven meetings beginning in September 1993, Wellness H brought together "representatives of [its] constituent base, [its] board, [its] other volunteer groups, staff, throughout [its] constituencies" to develop a new name. Trans. at 175. At those meetings, Mr. William Walker, the Executive Director of Wellness H, raised the issue that, given the Agreement's Section 8, the words "wellness" and "community" might not be legal options. Trans. at 176. Moreover, he "probably" suggested that the group not even consider the word 'wellness". Trans. at 176. When the group developed names that included "wellness" or "community," "people would throw [them] out and say that's a natural follower or something." Trans. at 178.
At the meetings, the group expressed its desire for Wellness H to be separate from Wellness C, but potential public "confusion [over the separation] was never an issue." Trans. at 180. On direct examination, counsel asked if, "in any of these conversations with Mr. [A. William] Haarlow
or with any of these other groups, did you discuss the question of whether using the word 'wellness' might be confusing?" Trans. at 180. Mr. Walker responded that "we did not discuss that. I think our plan to separate included intense face-to-face interaction with all our constituencies and written material to a number of others with follow-up phone calls. And we were clear that we were going to make it clear that we had left The Wellness Community National." Trans. at 180. The renaming group developed "somewhere between 300 and 400 possible [names]." Trans. at 178.
No later than October 18, 1993, Wellness C CWS adopted "Wellness H" as its official post-disaffiliation name. Pl. Ex. 25. In an October 22, 1993, letter, Wellness C informed Wellness H that "use of [Wellness H] specifically violates [Section 8] and will be confusing to the public in general and cancer patients ...