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03/20/96 ENGLISH COMPANY v. NORTHWEST ENVIROCON

March 20, 1996

ENGLISH COMPANY, PLAINTIFF-APPELLANT AND CROSS-APPELLEE,
v.
NORTHWEST ENVIROCON, INC., DEFENDANT-APPELLEE AND CROSS-APPELLANT.



Appeal from the Circuit Court Du Page County. No. 94-L-00703. Honorable Robert K. Kilander, Judge, Presiding. This Opinion Substituted On Denial of Rehearing for Withdrawn Opinion of February 14, 1996, Previously

Released for Publication April 24, 1996.

The Honorable Justice Colwell delivered the opinion of the court: Rathje, J., concurs. Justice Bowman, specially concurring:

The opinion of the court was delivered by: Colwell

JUSTICE COLWELL delivered the opinion of the court:

Plaintiff, The English Company (TEC), and defendant, Northwest Envirocon, Inc. (NWE), bring this appeal and cross-appeal, respectively. In its appeal, TEC asks this court to reverse the trial court's order of summary judgment finding that the term "products" as used in the Sales Representative Act (Sales Act) (820 ILCS 120/1 (West 1992)) refers only to tangible goods. In its cross-appeal, NWE argues for reversal of the trial court's denial of its motion to dismiss based on its finding that TEC's complaint under the Sales Act is statutory rather than contractual and thus the forum-selection clause in the parties' representation agreement is inapplicable.

NWE moved to dismiss the case because the parties' contract provided that any action on the contract be brought in the home State of the initial defendant and, thus, NWE argued, this case should have been brought in Washington. NWE also moved for summary judgment on the ground that, as a seller of "services" rather than "goods," it is not a principal under the Sales Act, which states that it applies only to sellers of "products." The trial court denied NWE's motion to dismiss on forum-selection grounds, finding that the forum-selection clause is against Illinois public policy. The court granted summary judgment in favor of NWE on the ground that the Sales Act does not apply to the instant situation because NWE sells services, not goods. We reverse in part, vacate in part, and dismiss.

The record reflects that defendant, a Washington corporation with a Chicago regional office, entered into a sales representation agreement with plaintiff's predecessor, The Thomas English Company, an Illinois corporation, on April 1, 1990. The agreement provided that TEC would sell NWE's environmental assessment and documentation to companies in northern Illinois and southern Wisconsin, including soliciting and accepting orders within defined parameters. TEC was to be paid fixed commissions for each sale. The agreement provided that TEC's representation of NWE could be terminated at any time by either party with 90 days' notice. Over time, TEC's sales territory was expanded to include all of Illinois, Indiana, Michigan, Wisconsin, and Iowa.

A subsequent agreement executed on March 23, 1992, allowed The English Company to succeed to the rights and duties of its predecessor (The Thomas English Company), but required that TEC accept a lower commission structure, meet higher sales goals, acquire more insurance, and forfeit all commissions earned after the effective date of any notice of termination of the agreement. This agreement also provided that commissions were to be paid on Wednesday for the previous week's receipts. Finally, the contract provided that any action at law by either party be brought in the home State of the initial defendant. NWE allegedly told TEC that its failure to accept the new terms would result in the termination of TEC's exclusive right to represent NWE in the defined territory. The contract was executed in Chicago according to a notary seal dated March 25, 1992.

On June 10, 1993, an attorney for TEC notified NWE by letter that TEC was exercising its right of termination, effective 90 days from the date of the letter (e.g., September 8, 1993). The reason cited was the invocation by NWE of a contractual clause which cost TEC $17,566.84 in lost commissions, as well as NWE's alleged harassment of and "belligerent attitude" toward TEC employees. TEC asserted that it believed that NWE was trying to force TEC to quit as its representative. The letter proposed a schedule for various winding-up activities and promised continuing good-faith efforts by TEC until the close of business on the final termination date. The letter also included a copy of a notice sent to customers stating that TEC would no longer be representing NWE after September 8, 1993. The letter made no mention of the reasons and promised to facilitate uninterrupted service to the customers. NWE responded by letter dated June 23, 1993, asserting that sending the client letter without first consulting NWE constituted a material breach of TEC's duty of undivided loyalty as NWE's agent. NWE also asserted that TEC had failed to follow NWE's written procedures regarding order documentation and record-keeping. NWE then asserted that, as a result of TEC's breach, NWE was relieved of its obligation to perform on the contract and therefore would not pay any commissions already owed or accept any more orders from TEC. NWE then demanded the return of various client files and promotional materials and instructed TEC to communicate only through counsel.

TEC wrote to NWE's counsel again on September 15, asserting TEC's right under the Sales Representative Act (820 ILCS 120/0.01 et seq. (West 1992)) to receive payment on all earned commissions within 13 days. There is no response from NWE reflected in the record. TEC filed the instant action on May 10, 1994. NWE motioned to dismiss under section 2--619 of the Code of Civil Procedure on forum and choice-of-law grounds based on the contract provision and under section 2--615 of the Code of Civil Procedure for failure to state a cause of action. 735 ILCS 5/2--615, 2--619 (West 1992). NWE also motioned for summary judgment on the ground that as a provider of "services" rather than "products" it was not subject to the Sales Act.

In separate orders, the trial court denied the motion to dismiss and granted the motion for summary judgment. The court found that the complaint was not brought on the contract, but rather was based on a statutory right enumerated by the legislature and, therefore, the choice-of-law and forum provisions were inapplicable. However, the court then found the term "products" in the Sales Act referred only to tangible goods and further found that NWE provides only "services" and is therefore not subject to the Sales Act.

We note initially that this court reviews both section 2--619 dismissals and summary judgments de novo. Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116, 189 Ill. Dec. 31, 619 N.E.2d 732 (1993); Wiseman-Hughes Enterprises, Inc. v. Reger, 248 Ill. App. 3d 854, 857, 187 Ill. Dec. 589, 617 N.E.2d 1310 (1993). The trial court's denial of the motion to dismiss did not specify the section upon which it was based, but, as it was clearly based on an "issue of law or easily proved issue of fact," we will treat it as a denial of a section 2--619 motion. See Johnson v. Du Page Airport Authority, 268 Ill. App. 3d 409, 414, 206 Ill. Dec. 34, 644 N.E.2d 802 (1994).

We will first address NWE's contention in its cross-appeal that the trial court erred in finding that the contractual choice-of-law and forum clause is inapplicable. The contract provision at issue reads as follows:

"14. Governing Law. The Agreement shall be tried or heard in and governed by and construed in accordance with the governing laws of the home state of the initial defendant to any action at law brought by or on behalf of the other party, including countersuit by the initial defendant."

A forum-selection clause is prima facie valid and should be enforced unless the opposing party shows that enforcement would contravene the strong public policy of the State. Maher & Associates, Inc. v. Quality Cabinets, 267 Ill. App. 3d 69, 74, 203 Ill. Dec. 850, 640 N.E.2d 1000 (1994); Calanca v. D&S Manufacturing Co., 157 Ill. App. 3d 85, 88, 109 Ill. Dec. 400, 510 N.E.2d 21 (1987). The choice of forum made in an arm's length negotiation by experienced and sophisticated businessmen, absent some compelling and countervailing reason, should be honored by the parties and enforced by ...


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