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05/30/97 VICTOR K. JESPERSEN v. MINNESOTA MINING

May 30, 1997

VICTOR K. JESPERSEN, D/B/A TRIM-LINE OF CHICAGO AND TRIM-LINE OF CHICAGO, INC., ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
MINNESOTA MINING AND MANUFACTURING COMPANY, INDIVIDUALLY AND AS SURVIVOR CORPORATION OF TRIM-LINE, INC., AND TRIM-LINE, INC., DEFENDANTS-APPELLEES.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. THE HONORABLE MICHAEL B. GETTY, JUDGE PRESIDING.

Rehearing Denied July 2 1997. Released for Publication July 21, 1997.

The Honorable Justice South delivered the opinion of the court. Hourihane, J., concurs. Hoffman, J., dissents

The opinion of the court was delivered by: South

The Honorable Justice SOUTH delivered the opinion of the court:

Plaintiff, Victor R. Jespersen, doing business as Trim-Line of Chicago and Trim-Line of Chicago, Inc. (collectively Jespersen), on behalf of himself and other similarly situated distributors of Trim-Line products, filed a third amended class action complaint against defendants, the Minnesota Mining and Manufacturing Company (3M) and Trim-Line, Inc. (Trim-Line) alleging breach of contract. 3M filed a motion to dismiss the third amended complaint pursuant to section 2-615 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 1994)), for failure to state a cause of action. The circuit court granted 3M's motion to dismiss and entered judgment in favor of 3M and against Jespersen. Jespersen appeals.

On January 16, 1978, Jespersen entered into a sales distribution agreement with Trim-Line. Under the terms of this agreement, Jespersen was appointed the exclusive distributor of Trim-Line products in a specifically defined geographical area and was granted a license to use Trim-Line trademarks. Trim-Line manufactured, sold and installed automobile body trim, moldings, decorative designs, and other related parts and services. Trim-Line distributed its products and services, in part, through independent distributors such as Jespersen.

In the early 1980s, 3M purchased Trim-Line, which became a wholly owned subsidiary of 3M. On or about January 1, 1991, 3M implemented a plan to dissolve Trim-Line as a separate corporation and merged its business activity into 3M's Automotive Trades Division. On January 2, 1991, 3M sent its distributors, including Jespersen, a letter terminating the sales distribution agreement.

On December 28, 1994, Jespersen and two other terminated distributors filed a class action complaint against 3M and Trim-Line alleging various claims, including one for breach of an implied covenant of good faith and fair dealing. On June 29, 1995, the initial complaint was dismissed with leave to refile an amended complaint. On July 27, 1995, the first amended complaint was filed. That amended complaint was withdrawn, and a second amended complaint for breach of an implied covenant of good faith and fair dealing was filed on November 14, 1995. On December 26, 1995, the circuit court dismissed the second amended complaint in a written memorandum of opinion, and Jespersen was granted leave to amend the complaint. On January 23, 1996, Jespersen filed his third amended class action complaint for breach of contract. On February 22, 1996, 3M moved to dismiss Jespersen's third amended complaint under section 2-615 (735 ILCS 5/2-615 (West 1994)). On May 30, 1996, the circuit court granted 3M's motion and dismissed the third amended complaint in a written memorandum of opinion. Jespersen appeals the dismissal of his third amended complaint.

The standard of review on appeal from a section 2-615 motion to dismiss is whether the complaint sufficiently states a cause of action. Saunders v. Michigan Avenue National Bank, 278 Ill. App. 3d 307, 662 N.E.2d 602, 214 Ill. Dec. 1036 (1996). We do not consider the merits of the claim. Saunders, 278 Ill. App. 3d 307, 662 N.E.2d 602, 214 Ill. Dec. 1036. All well-pleaded facts and reasonable inferences that could be drawn from those facts are accepted as true ( Talbert v. Home Savings of America, F.A., 265 Ill. App. 3d 376, 638 N.E.2d 354, 202 Ill. Dec. 708 (1994)), but not conclusions of law or conclusions of fact unsupported by allegations of specific facts ( Groenings v. City of St. Charles, 215 Ill. App. 3d 295, 574 N.E.2d 1316, 158 Ill. Dec. 923 (1991)). A complaint should not be dismissed under section 2-615 unless it clearly appears that no set of facts could be proved under the pleadings that would entitle the pleader to relief. Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 639 N.E.2d 1282, 203 Ill. Dec. 463 (1994).

Jespersen's third amended complaint alleges five separate but related breaches of various provisions of the sales distribution agreement. Specifically, Jespersen alleges that (1) 3M breached section 4.01 by terminating the agreement without cause; (2) 3M breached section 2.01 by appointing 3M's Automotive Trades Division to sell Trim-Line products and services in the area of primary responsibility that had been previously assigned to Jespersen; (3) 3M breached section 3.01 by withholding from Jespersen 3M's acceptance of orders and failing to make full and timely delivery of products previously ordered; and (4) 3M breached sections 5.01 and 5.02 by failing to consult with Jespersen prior to terminating his area of primary responsibility and failing to consider the appropriate contractual factors, such as Jespersen's performance in his area, before the termination. However, the basis of the entire third amended complaint is that 3M could not terminate the distribution agreement except for cause as provided in section 4.01 of the agreement.

In granting 3M's motion to dismiss the third amended complaint, the circuit court found that (1) the sales distribution agreement expressly provided that it was to last indefinitely and was thus terminable at will as a matter of law, and (2) the agreement expressly granted 3M the right to cancel Jespersen's license to use the Trim-Line trade name upon request and, without a right to use the Trim-Line name, the sales distribution agreement has no effect.

On appeal, Jespersen contends that the circuit court erred in finding that the sales distribution agreement was terminable at will. Jespersen argues that examination of both sections 2.05 and 4.01 illustrates that the sales distribution agreement contained definite termination events which are provided in section 4.01 and expressly limited termination by 3M for cause only. Jespersen concludes that, since he did not violate any provision of section 4.01, 3M's termination of the sales distribution agreement was a breach of the agreement. We affirm the order of the circuit court.

Initially, we note that section 6.05 of the sales distribution agreement specifies that the interpretation of the agreement shall be construed under the laws of the state of California. Nevertheless, both parties rely primarily upon Illinois law to support their respective positions. Because California law and Illinois law are consistent in holding that contracts of indeterminate duration are terminable at will by the parties (see El Cajon v. Police Officers' Ass'n, 49 Cal. App. 4th 64, 56 Cal. Rptr. 2d 723 (1996); Ruca Hardware Ltd. v. Ruca Chien, 1995 U.S. Dist. LEXIS 6678, No. 94-C-3635 (N.D. Ill. 1995); R.J.N. Corp. v. Connelly Food Products, Inc., 175 Ill. App. 3d 655, 529 N.E.2d 1184, 125 Ill. Dec. 108 (1988)), the determination of this matter is not altered.

Although it is well established that contracts of perpetual duration are terminable at will by the parties, a contract which nonetheless provides that it will terminate upon the occurrence of a specific event is not deemed perpetual in duration and is not terminable at will, but is terminable upon the occurrence of any of the conditions enunciated. ...


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