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Diederich Insurance Agency, LLC v. Chad Smith

June 7, 2011

DIEDERICH INSURANCE AGENCY, LLC,
PLAINTIFF-APPELLANT,
v.
CHAD SMITH,
DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Jackson County. No. 09-L-57 Honorable W. Charles Grace,Judge, presiding.

The opinion of the court was delivered by: Justice Goldenhersh

NOTICE

The text of this dec ision m ay be changed or corrected prior to the filing of a Petition for Re hea ring o r the disposition of the same.

JUSTICE GOLDENHERSH delivered the judgment of the court, with opinion. Presiding Justice Chapman and Justice Donovan concurred in the judgment and opinion.

OPINION

Plaintiff, Diederich Insurance Agency, LLC, filed a two-count complaint against defendant, Chad Smith, a former employee of plaintiff. Count I sought money damages for breaching the terms of a restrictive covenant, and count II sought money damages for failing to repay commissions advanced to defendant by plaintiff. The circuit court of Jackson County granted defendant's motion to dismiss count I pursuant to section 2-619(a)(9) of the Code of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2008)). Plaintiff later voluntarily dismissed count II. That count is not a part of this appeal. The issues raised in this appeal are as follows: (1) whether the circuit court erred in finding as a matter of law that there was insufficient consideration given by plaintiff for defendant's nonsolicitation agreement and (2) in the alternative, whether defendant's continued employment for three months after signing the nonsolicitation agreement provided sufficient consideration for that agreement. We affirm.

FACTS

Defendant worked as an insurance broker/agent for plaintiff from October 1, 2007, through June 16, 2008. At the time defendant began working for plaintiff, he signed an employment agreement in which he agreed not to solicit insurance business from plaintiff's customers for a period of two years after he stopped working for plaintiff. The employment agreement specifically stated the following:

"[Defendant] also covenants that in the event of termination of this Agreement, as provided herein, for whatsoever reason, he/she shall not, either directly or indirectly on his/her own account, or for or on behalf of any person, company, or agency, other than [plaintiff], record, solicit, or otherwise procure insurance from individuals, partnerships, corporations or other entities who have done business with or in any way been associated with [plaintiff], for a period of 2 years after the termination of this Agreement. Further, [defendant] agrees during the continuance of this Agreement and after its termination for the period specified[] that he/she will not directly or indirectly divert or take away or attempt to divert or take away any of the customers, business, or patronage of such customers as are served by [plaintiff]."

On March 14, 2008, defendant signed an employee confidentiality agreement that reduced the terms of the nonsolicitation agreement from 2 years to 12 months.

On June 16, 2008, defendant stopped working for plaintiff. On May 15, 2009, plaintiff received notification from Logan Primary Care Service Corporation (hereinafter Logan), one of plaintiff's long-standing clients, that Logan would no longer be utilizing plaintiff as its medical malpractice professional liability insurance broker. Logan informed plaintiff that it was appointing Arthur J. Gallagher & Co. (hereinafter Gallagher) as its medical malpractice professional liability broker. Defendant arranged the transfer of Logan's medical malpractice professional liability insurance carrier services from plaintiff to Gallagher.

On June 8, 2009, plaintiff filed its two-count complaint against defendant. Defendant filed a motion to dismiss both counts of the complaint with prejudice pursuant to section 2-619(a)(9) of the Code. On August 27, 2009, the circuit court dismissed count I, finding, "[T]here is insufficient consideration as a matter of law and there is no genuine issue of material fact, and pursuant to Fuller [Fuller Family Holdings, LLC v. Northern Trust Co., 371 Ill. App. 3d 605, 863 N.E.2d 743 (2007)] and Woodfield [Woodfield Group, Inc. v. DeLisle, 295 Ill. App. 3d 935, 693 N.E.2d 464 (1998)], Count I herein is dismissed pursuant to 2-619." On December 14, 2009, plaintiff filed a motion to voluntarily dismiss count II, which the circuit court granted. Plaintiff filed a timely notice of appeal.

ANALYSIS

The first issue we are asked to address is whether the circuit court erred in finding as a matter of law that there was insufficient consideration given by plaintiff for defendant's nonsolicitation agreement. Plaintiff contends the two-year covenant not to compete, which defendant entered into when he started his employment with plaintiff, was enforceable and supported by sufficient consideration, namely, the job he obtained. Furthermore, plaintiff argues, the reduction of the length of the covenant not to compete from two years to one year was an actual benefit to defendant, and thus no additional consideration was needed to support the nonsolicitation agreement. Alternatively, plaintiff argues that its agreement to reduce the duration of defendant's covenant not to compete provided the necessary consideration or defendant's continued employment for three months after signing the nonsolicitation agreement provided sufficient consideration. Defendant responds that the nonsolicitation agreement was a modification of the previous ...


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