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June 29, 1995


Appeal from Circuit Court of Sangamon County. No. 91CH211. Honorable Richard J. Cadagin, Judge Presiding.

As Corrected July 19, 1995. Petition for Rehearing Denied September 1, 1995. Petition for Leave to Appeal Denied December 6, 1995.

Honorable Frederick S. Green, J., Honorable James A. Knecht, P.j., Honorable Robert W. Cook, J., Concurring

The opinion of the court was delivered by: Green

JUSTICE GREEN delivered the opinion of the court:

In July 1989 plaintiff, Brian L. Jackson, bought a Springfield hobby shop business known as the Whistle Post from defendants Mark and Linda Hammer. In November 1991, plaintiff filed the instant suit for declaratory and injunctive relief, alleging breach of proprietary and contractual rights and violation of the Illinois Trade Secrets Act (Act) (Ill. Rev. Stat. 1991, ch. 140, pars. 351 through 359) against the Hammers and defendant Tim Fleckenstein. In February 1994, defendants counterclaimed for attorney fees pursuant to the contract of sale for the business.

After a bench trial in April 1994, the trial judge ruled in favor of defendants on the complaint and in favor of plaintiff on the counterclaim. In June 1994, the trial court denied defendants' motion for Rule 137 sanctions. (See Official Reports Advance Sheet No. 26 (Dec. 22, 1993), R. 137, eff. Feb. 1, 1994).) Plaintiff appeals, arguing that defendants' use of a customer list from the Whistle Post was a breach of the contract of sale and a violation of the Act. Defendants cross-appeal, arguing that there was no breach of contract, the Act does not apply and defendants are entitled to attorney fees under the contract of sale. We reverse and remand the denial of attorney fees, and affirm the ruling in favor of defendants on the complaint and the denial of Rule 137 sanctions.

Around 1984, Mark and Linda Hammer opened a hobby shop in Decatur, Illinois. In 1987, they bought a hobby shop in Springfield, Illinois, known as the Whistle Post. The Whistle Post was run by Tim Fleckenstein.

Before buying the Whistle Post, the Hammers had a customer list in the Decatur store. When they bought the Whistle Post, there were some cards containing customers' names and phone numbers. The Hammers used these cards and continued to develop a list by compiling names and addresses of customers. At the Whistle Post, blank cards were made available for customers to fill out with information on themselves. These cards were then kept in a file box. The customer list was developed exclusively by having customers who came to the store fill out the cards. Mark testified that he could recite approximately one-half of the names from the Whistle Post customer list.

While the Hammers still owned both stores, they copied the cards that were at the Whistle Post and took them back to the Decatur store. The Hammers then added the names from the Whistle Post cards to the Decatur list to form one master list, which they entered on their computer. Once this list was made, the Hammers could not tell from which store a particular name on the list came. This was done so that flyers could be sent out from Decatur to everyone on the customer list. Prior to the sale, the Hammers never told plaintiff that the list had been copied.

The July 1989 contract by which the Hammers sold plaintiff the Whistle Post provided for the sale of certain tangibles "and the trade, business name, telephone number and listing, goodwill, and all other intangible assets of the Business." The contract also contained a noncompete clause, whereby the Hammers agreed "to refrain from directly or indirectly carrying on or engaging in any retail business that is similar to the [Whistle Post] *** within a 30[-]mile radius of Springfield for a period of 2 years"; and an "entire agreement" clause.

Before plaintiff signed the contract for the sale of the store, he was aware of the existence of the customer cards. Plaintiff and Mark also discussed the customer list as a way of notifying customers if the store moved locations. Plaintiff did move the store in August 1989. Plaintiff claims that before closing the deal, he checked to see if the file box was still in the store.

After the closing, the Hammers left the file box with the cards at the Whistle Post. Mark testified that the file box was left in the store and that plaintiff got the box with the store.

In September 1989, after the sale of the Whistle Post to plaintiff, the Hammers sent out an advertising flyer for the Decatur store, "Hammer's Hobbies." The flyers were sent to everyone on the master customer list, which included approximately 100 to 130 customers from both the Decatur store and the Whistle Post.

Plaintiff learned of this flyer from a customer of the Whistle Post who had received one. Plaintiff then had his attorney send the Hammers a letter protesting the solicitation of prior customers of the Whistle Post as a violation of the contract. Mark then met with plaintiff outside the Whistle Post. Plaintiff testified that he complained to Mark about his sending flyers into the noncompete area and about his using the Whistle Post customer list to do so. Plaintiff testified that Mark said that the mailing of flyers to customers of the Whistle Post was an inadvertent mistake, and that he would remove those names from the master list. Mark claimed that he told plaintiff that he (Mark) misunderstood the noncompete clause; he thought that he was only prohibited from opening a retail store in the area and was allowed to solicit by mail. He also claimed that plaintiff did not complain about his use of the Whistle Post customer list. Mark told plaintiff that he would not send anything into the noncompete area. Mark then went to his computer and separated the names with addresses within the noncompete radius from all the others.

In August 1991, when the noncompete clause had expired, the Hammers opened a new hobby store in Springfield known as Springfield Hammer's Hobbies. In September 1991, the Hammers sent out 172 copies of a second flyer to all names on their customer list, announcing the opening of the new store. This included the names that had originally come from the Whistle Post list, and that Mark had "removed" at plaintiff's request.

Plaintiff learned of the second flyer from a customer who had received one. Plaintiff complained to Mark about his use of the customer list for the flyer. Plaintiff told Mark that he believed Mark had sold him the customer list and could not use it to solicit even though the noncompete clause had expired. Plaintiff claimed that Mark said the ...

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