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Fabricare Equipment Credit Corporation v. Bell

March 21, 2002


Appeal from the Circuit Court of Cook County. No. 98 L 9774 Honorable Kathy M. Flanagan, Judge Presiding.

The opinion of the court was delivered by: Justice Theis


Plaintiff, Fabricare Equipment Credit Corporation (FECC) appeals from the order of the circuit court of Cook County dismissing its legal malpractice complaint against defendants, Bell, Boyd & Lloyd and Sanford Gail, one of its partners, pursuant to section 2-615 of the Illinois Code of Civil Procedure. 735 ILCS 5/2-615 (West 1998). FECC contends on appeal that the trial court erred in finding that it failed to sufficiently plead a cause of action. For the following reasons, we affirm the judgment of the circuit court.


FECC was engaged in the business of securing equipment lease financing for the dry cleaning industry. On October 30, 1990, it entered into an agreement with Safety-Kleen Corporation (Safety-Kleen), a company that provides waste retrieval and reclamation services to dry cleaner operators and others. The agreement was negotiated and drafted on FECC's behalf by Bell Boyd & Lloyd (BBL). Pursuant to the agreement, FECC was to provide Safety-Kleen with a lease financing program and related training, management and personnel to enable Safety-Kleen to market an equipment lease financing service to dry cleaners. At the end of the term of the agreement, Safety-Kleen was provided with the option "at its sole election" to purchase FECC. The agreement additionally provided that any proprietary information retained by Safety-Kleen was to be held in strict confidence. It also provided that for a period of two years following the termination of the agreement, Safety-Kleen would not provide "equipment lease financing services to dry cleaners in the United States." The agreement terminated on June 30, 1991, due to Safety-Kleen's decision not to exercise its option to purchase FECC.

After the termination of the agreement, Safety-Kleen undertook a new program to supply the dry cleaning industry and its customers with reusable dry cleaning bags. FECC believed that Safety-Kleen was providing lease financing for the program, thereby violating the non-compete provisions of their agreement. In response to the claimed violation, FECC retained BBL to pursue claims against Safety-Kleen "for breach of contract and associated claims of [FECC] relating to [Safety-Kleen's] breach of the October 30, 1990 [a]greement not to compete with [FECC]."

The BBL fee agreement provided that "[t]he [c]omplaint shall seek, among other things, a Declaratory Judgment *** as to whether [Safety-Kleen]'s self-financing in its reusable bag program violates its agreement not to provide equipment lease financing services to dry cleaners in competition with [FECC]." Additionally, the agreement provided that "[i]f [FECC] does not prevail in the [c]circuit [c]court, BBL, after consultation with [FECC], will not be obligated to pursue an appeal which either it or [FECC] believes is not meritorious."

BBL filed a verified complaint seeking a declaratory judgment, and alleging theories of breach of contract and unfair competition. Specifically, the complaint alleged that Safety-Kleen had misappropriated FECC's confidential and proprietary business information in connection with its reusable bag program, and had violated the non-compete obligations and the confidentiality provisions of the agreement.

Following a bench trial in the Chancery Division of the circuit court, the trial court found that the contract entered into between Safety-Kleen and its dry cleaner customers was not a lease transaction, but rather an installment sales transaction. The court further found that the information provided to Safety-Kleen was not confidential, and that FECC's proposal for providing equipment leasing services was expressly rejected by Safety-Kleen. Thus, the court held that Safety-Kleen's actions did not violate the provisions of the non-compete clause, and did not constitute unfair competition based upon the misappropriation of proprietary information or ideas. BBL initially filed a notice of appeal from that judgment, but subsequently informed FECC that it believed the appeal lacked merit and withdrew it.

On August 20, 1998, FECC commenced its legal malpractice action against BBL and Gail, alleging professional negligence and breach of fiduciary duty in negotiating the agreement with Safety-Kleen and in handling the subsequent litigation. In its fourth amended complaint, FECC alleges that BBL and Gail breached their duty and negligently committed one or more of the following wrongful acts or omissions:

a) failed to protect FECC from Safety-Kleen's use of the agreement as a means of obtaining its business information and ideas, and methods and manner of operation without payment.

b) failed to pursue the equitable remedies of recission and restitution on the basis of fraud in the inducement or breach of fiduciary duty, and exposed FECC to liability on the attorney fee clause in the agreement.

c) failed to investigate and pursue a cause of action for breach of the option agreement for Safety-Kleen's failure to conduct the promised test marketing, or to pursue a cause of action for opportunistic use of the agreement in bad faith to obtain FECC's business information and ideas.

d) failed to investigate and pursue a cause of action under the Illinois Trade Secrets Act, 765 ILCS ...

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